Commerzbank

A trio of euro borrowers launched trades and a fourth picked banks on Tuesday in a market buoyed by a perceived renewal of European political unity following welcome results in elections in France and Italy at the weekend.

Although sentiment around the euro corporate bond market is favourable, following Emmanuel Macron’s party’s decisive results in French parliamentary elections on Sunday, only one new issue and one tap hit investors’ screens on Tuesday.

Afreximbank had taken books of $2bn for its new seven year note on Tuesday morning as the bid for African credit gathered pace.

Bank Nederlandse Gemeenten slam-dunked a single day euro execution on Monday into a market buzzing from a pair of eurozone election results over the weekend. Another two issuers have lined up euro deals — including one debut.

Investec Bank launched a $300m two year term loan this week to refinance a three year facility signed in February 2015. The deal comes after Moody's downgraded South Africa's five biggest banks on Monday, following the sovereign downgrade last Friday.

KfW is the solitary SSA issuer out in dollars so far this week, and it is sticking to the very short end with an 18 month deal, a week before a US Federal Open Market Committee meeting at which investors overwhelmingly believe it will raise its target rate.

Industrial Commercial Bank of China’s London branch and subsidiary signed a self-arranged $1.25bn facility in an oversubscribed deal with 16 banks on Tuesday. The deal follows a spate of lending by the bank in emerging market deals.

Since April this year, the ECB has reduced its monthly QE purchases from €80bn to €60bn. This did not have much direct effect on the covered bond market though; the ECB has predominantly scaled back the purchases of government bonds, with spreads which already sufficiently reflected this. On the covered bond side we do not expect to see any strategic changes in buying behaviour (yet) as CBPP3 (the third covered bond purchase programme) purchases are decreasing in any case for seasonal reasons amid shrinking primary market activity. However, it is ultimately only a matter of time until the ECB has no choice but to start official tapering on a broader front. Commerzbank expects the QE programme to be gradually reduced further from the beginning of 2018 and then finally cease at the end of 2018. Consequently, while up to now we have always regarded it as premature to speculate on the CBPP3 end game effects, it does make sense to start thinking now about the spread impact of the exit.

After closing its largest ever loan African Export-Import Bank has named banks for a dollar bond of up to seven years.

Export-Import Bank of China came to the market with a two-currency, fixed and floating rate transaction on Thursday, snapping up $918m-equivalent. Its outing followed downgrades on China’s sovereign rating and that of the issuer, but buy-side concerns were well contained.

Oil and gas company MOL became the first Hungarian issuer in the Schuldschein market this week. And, as the market expands further from Germany, there is no sign that credit quality will become less central to an issuer’s success.

Commerzbank has signalled its intention to formally pull out of the ship Pfandbrief business, while NordLB is considering a sale of Deutsche Hypo to shore up capital after absorbing BremerLB’s loss-making shipping business.