Coronavirus

Lead managers added 1% Libor floors to recent dollar loans from Polynt-Reichold and Genesis Care, part of a package of measures to push them over the line as market conditions deteriorated in the last two weeks. But rates have plunged so quickly that these floors are already in the money.

Volatility in the financial institutions bond market drove spreads even wider on Monday as a crash in the price of oil added to fears over the extent of the coronavirus outbreak. It was enough to close the primary bond market for the foreseeable future, said market participants.

Some leveraged issuers could avoid covenant breaches thanks to the coronavirus outbreak, according to researchers, by using the "extraordinary, unusual or non-recurring" carve-outs to add back some costs to Ebitda figures.

European equities plunged into bear market territory on Monday morning after the price of oil collapsed by 30% following the decision by Saudi Arabia to launch a price war after OPEC and Russia failed to reach a deal on production cuts at the weekend.

Mexican hotel operator Grupo Posadas became the first Latin American issuer to suffer a ratings action as a direct result of the Covid-19 coronavirus outbreak, with both tourism industry and capital markets conditions worsening while a bond maturity looms.

Bond issuers returned to the primary market this week showing greater resilience than many expected. The intense gyrations gripping underlying rates and equities mean that deals are likely to be far from easy to do for some time as the effects of the Covid-19 outbreak grip global markets.

The US Federal Reserve’s emergency 50bp cut in interest rates on Tuesday failed to reassure markets. The US and European response to the Covid-19 coronavirus outbreak needs to incorporate targeted fiscal policy as well.

The coronavirus knows no borders — but the response is all about national power. The same will be true in markets.

Workers of the world’s capital markets united this week in efforts to keep the funding flowing as the threat of the Covid-19 coronavirus advances. Roadshows, mandate pitches and even quotidian office life faced emergency changes as embattled financiers braced themselves and their businesses for virus disruption.

The worsening of the Covid-19 outbreak has battered equity prices and sent investors scurrying for the safety of core government bonds. Most primary markets are all but shuttered, and investors are praying for central banks to provide a glimmer of hope.