Crédit Agricole

Rating: Aa2/AA

Covered bond issuers from Europe’s core accessed the market across a range of intermediate tenors this week with LBBW, Compagnie de Financement Foncier (CFF) and Helaba issuing some of their largest deals in years.

The equity-neutral convertible bond structure that faded from the market in the second half of 2016 made a strong comeback on Thursday, when French tyre maker Michelin launched a $500m deal that won eager demand and was priced at the best end of terms for the issuer, writes Jon Hay.

European financials have found every reason to get into the dollar market early in 2017, leading to a fireworks display of total loss-absorbing capacity (TLAC) senior deals this week. Though market conditions could not have been better to receive the banks, many will have wanted to squirrel away quantities of funding and capital for what could be another troublesome year in the capital markets.

The equity-neutral convertible bond structure that faded from the market in the second half of 2016 made a strong comeback today, when Michelin, the French tyre maker, launched a $500m deal that won eager demand and was priced at the best end of terms for the issuer.

Four covered bonds issuers raised almost €6bn between them at the long end of the curve this week, suggesting borrowers are prioritising tougher, longer duration deals. And while conditions permit some are issuing in the largest size possible.

A pair of public sector borrowers switched up their approaches in dollars on Thursday, with the European Investment Bank taking the rare move of revising pricing and Caisse d’Amortissement de la Dette Sociale bringing a trade earlier than normal.

French medicine manufacturer Unither Pharmaceuticals is set to kick off the primary market in European leveraged finance for 2017, setting a bank meeting for Tuesday in Paris for €260m of loans.

Société Générale became the third French bank to dip into dollars for senior non-preferred debt this week, with investors appearing hungry for the new product.

A dual tranche global deal from the Asian Development Bank on Wednesday at least temporarily dashed hopes that this year could be strong for 10 year dollar benchmark issuance — although some bankers away from the trade felt that the problems were idiosyncratic rather than reflective of demand.

Barclays pulled in $1.5bn for a 30 year senior bond as part of a four-tranche offering worth $5bn, as five Yankee FIG borrowers powered through the first global window of 2017.

High volumes of issuance have boosted confidence in FIG primary market conditions at the start of 2017, with bankers expecting flows to remain high until banks start going into blackout later this month.