Barclays

UniCredit jumped into the euro market to raise senior funding at a pricing level it found much more familiar than recent elevated levels this week, while BPER Banca gave investors their first chance in several months to buy a new issue from a second tier Italian bank.

Conditions in the financial institutions bond market worsened this week but plenty of senior and subordinated bonds still got away. With credit spreads unpredictable, the supply outlook remains favourable, said bankers.

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Market participants expect European banks to take a large chunk of funding through the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO III) programme, hitting covered bond supply levels. But issuance in other asset classes should remain unaffected as banks follow through with their funding plans.

China Mengniu Dairy Co hit the debt market straight after a profit warning, but still managed to attract investors to its $800m dual-tranche bond, tightening pricing on both portions by 80bp.

BPER Banca opened books for its inaugural sale of senior debt on Wednesday, giving investors their first chance to buy into a new issue from a second tier Italian bank during the Covid-19 pandemic.

Volkswagen, the German car company, has waited a long time before issuing any euro bonds from its industrial arm since the Covid-19 crisis began, but on Wednesday it broke its silence — and surprisingly, with a hybrid deal. VW has gone beyond refinancing an old hybrid and added ballast to its balance sheet, helping its ratings, which are on negative outlooks.

The UK Debt Management Office launched a syndication on Tuesday, printing a new October 2050 line and raising £9bn.

Three SSA borrowers hit the dollar market on Tuesday. The Inter-American Development Bank raised $4bn with a five year while Kommunalbanken tested the waters at 10 years. The World Bank joined them with a small but impressive bond linked to Sofr.

There were no issues of competing supply on Tuesday as three eurozone sovereigns amassed big order books, buoyed by last week’s expansion of the Pandemic Emergency Purchase Programme (Pepp).

UniCredit is only the second Italian bank to have accessed public primary bond markets during the coronavirus pandemic, but other lenders from the periphery of the eurozone are now lining up to bring deals of their own.

Angus Whelchel, who was global head of private capital markets and a managing director at Barclays, has left the bank, according to market sources.