Coronavirus

A good number of covered bond issuers are planning deals, and some had hoped to open books on Monday, but market conditions were too volatile. The market is open provided careful attention is paid to name, spread, tenor and timing — with the key to success down to careful preparation, bankers told GlobalCapital on Monday.

An extraordinary demonstration of support from the US Federal Reserve over the weekend has done nothing to lift investors' spirits, with fears about the economic consequences of Covid-19 showing through in equities, credit and even the rates market on Monday morning.

FIG DCM officials say it is impossible to tell when banks could return to selling unsecured debt, with markets locked in a period of extreme volatility and uncertainty.

Emerging markets issuers have for the most part taken enough advantage of a bond bull run to sit safe as volatility upends markets. But when the primary market reopens, they will change funding tactics as they start to need more cash.

Air France-KLM has taken a series of exceptional measures including drawing down on €1.765bn of bank debt, as some lenders say that the industries worst affected by the coronavirus pandemic will lean heavily on their lending banks.

Though Latin American bonds offered some consolation to investors on Friday, the relief is likely to be short-lived as the region buckles down to fully face the effects of the coronavirus pandemic.

Markets expressed disappointment following the European Central Bank’s monetary policy meeting this week, but some analysts said that the changes made to the terms of its bank funding schemes represented a real war chest to support lending.

A sharp sell-off in Argentina’s international bonds is likely to have a major impact on the government’s attempts to restructure nearly $70bn of debt, but there was disagreement as to whether lower secondary prices would make life harder for the borrower.

One of the worst ever weeks in markets spared no asset class, and investors warned that Latin America’s mostly commodity-oriented economies were in a particularly bad spot as the region’s oil producers led EM losses in both corporates and sovereigns.

The world’s largest economy is, among advanced societies, the least prepared to deal with containing the spread of Covid-19. This will have grave repercussions for the global economy.

Governments and central banks failed to prevent fear from taking hold of the capital markets this week, as Covid-19 reached pandemic status. European equity indices faced record falls on Thursday, before the Federal Reserve Bank of New York announced a $500bn repo operation to combat "highly unusual disruptions" in the US Treasury market. But it is far from clear if such extraordinary intervention will be enough to stop the panic.

Bankers are confident that companies up and down the ratings scale can lean on their lending groups during market volatility. But borrowers in the most stretched groups are not waiting to find out, with some clients already drawing their lines, adding backup loans, and trying to negotiate waivers on debt limits. Silas Brown, Jon Hay and Owen Sanderson report.