Crédit Agricole

The covered bond market passed another milestone this week with Caisse Française de Financement Local (Caffil) and Compagnie de Financement Foncier (CFF) attracting book sizes that were reminiscent of the high yielding peripheral transactions seen a year ago, but at spreads well through mid-swaps.

Agence Française de Développement this week became the first supranational or agency issuer to raise €1bn with a green new issue in euros at the long end of the curve, while the European Investment Bank priced a tap of a November 2026 Climate Awareness Bond in Ecoop format. That came just a week after it sold the original deal, which is its longest benchmark Climate Awareness Bond in euros.

Germany is once again leading the way in covered bond innovation. After issuing the first SME backed deal and the first Pfandbrief backed by aircraft loans, Münchener Hypothekenbank (Muhyp) this week announced the first Pfandbrief backed by environmental and social governance (ESG) mortgage loans.

The senior FIG market enjoyed a barnstorming week in euros. A combination of a positive market tone following last week’s European Central Bank meeting and high levels of cash at investment houses allowed issuers to rack up large order books while pricing at competitive levels.

Crédit Agricole is set to price its third additional tier one deal on Thursday afternoon. The print, the issuer's second in dollars, has drawn a granular order book, despite offering little premium over the issuer's outstanding debt.

Transurban Group, the Melbourne-based toll roads group, brought its European roadshow last week to fruition on Monday with a €600m bond issue that was a bigger blowout than it could have dreamt of.

Delachaux, the French industrial company, has launched a €765m loan that will refinance debt and enable it to pay a dividend to shareholders.

Macquarie and Zurich Insurance kicked off what is expected to be a busy week for senior issuance on Monday as issuers looked to take advantage of positive sentiment following last week's European Central Bank meeting. Zurich was able to draw together a comfortably oversubscribed book, while Macquarie printed with only a small new issue premium compared to secondary paper.

The subordinated debt market for European financials was back in full swing with four deals out on Monday morning boosted by the European Central Bank's policy decisions made last week.

Rating: Ba1/BB/BB+

Santander and UniCredit reopened the door to the additional tier one market this week only to find what lay behind it was a very different dynamic from the one borrowers experienced before summer. An expected burst of supply is on the way and historically low coupons are causing investors to shy away from the AT1 from major European banks.

From being all but frozen out of the capital markets a little over two years ago, eurozone periphery sovereigns could soon be in the position to dictate terms and push investors on duration, said bankers this week, following Portugal’s return to the 15 year part of the curve for the first time since the collapse of Lehman Brothers and Spain’s longest ever print. New measures from the European Central Bank that sent yields tumbling could put the sovereigns in an even stronger position, although that might not extend to Greece, which is planning a seven year bond for later this year.