Erste Group Bank
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State-owned Hungarian Development Bank (HDB) on Wednesday launched a euro-denominated benchmark bond. The bond marks the third entry into the market by the Hungarian sovereign or one of its entities during the coronavirus pandemic. -
The corporate bond market made a promising start to the week with oil company OMV’s dual tranche bonds and Deutsche Börse’s hybrid trade commanding sizeable books and big price moves, which bodes well for the spate of mandates that have landed on investors’ screens.
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European emerging market names have bulked up deal flow during the Covid-19 crisis and The Republic of North Macedonia continued that trend on Wednesday with a six year euro benchmark deal.
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Issuance in the financial institutions bond market had a preferred senior flavour this week, with issuers finding this the most cost-effective funding compared with other asset classes. In addition, some of them can use it to fulfil regulatory requirements.
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Nordea Bank and Erste Group Bank were marketing preferred senior bonds on Wednesday, finding demand in the seven year part of the curve following a flurry of five year deals earlier this week.
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The Republic of Lithuania joined the ranks of top tier emerging markets issuers proving their access to bond markets in the teeth of the coronavirus pandemic on Tuesday, as it broke its issuance record with a €2bn dual tranche trade.
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MTN deal volumes year-to-date have slumped by nearly a third year on year, falling from $51.6bn in 2019 to $35bn this year. The fall has been particularly pronounced in core currency deals, with deals from other currencies forming a larger proportion of the market.
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The euro market had no trouble digesting a pair of similar trades from Landesbank Baden-Württemberg (LBBW) and Svenska Handelsbanken this week, with both banks printing non-preferred senior bonds at 58bp and paying a small new issue premium to investors.
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Austria's new benchmark was over 10 times covered on Wednedsay, making the sovereign the latest in a string of its peers to receive a record order book for a syndicated bond this year.
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Issuers of additional tier one (AT1) capital have been more than 10 times subscribed for new deals on average in 2020 so far. This week's euro trade from Erste Group was no exception, with the €500m bond attracting €6.25bn of orders and a 'phenomenally tight' coupon.
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Issuers rushed to open the euro covered bond market this week. Trades from ABN Amro, Erste Group and LBBW showed that investors are ready to put cash to work, but higher new issue premiums suggested that issuers were taking a 'conservative' approach at the beginning of the year.
