Euro

The theme in the euro public sector market this week was large book sizes despite issuers paying very little concession, with Finland, the European Investment Bank (EIB), Madrid and the Joint Länder all keeping close to their curves.

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Italy received record-breaking demand for a long end syndication this week, overtaking its previous record set only last month. But it wasn’t all positive for Italy, as its bonds took a hit after the European Commission cut the country’s growth forecast on Thursday.

Several Spanish regions are expected to return to bond markets this year, having been locked out since the eurozone sovereign debt crisis. GlobalCapital understands that the Spanish government has approved a request for new debt to be issued by the Balearic Islands — a region that has not sold a bond since 2012. More approvals could follow in the next few weeks. Burhan Khadbai reports.

Green bond issuance has been in hot demand so far this year, with investors allocating ever greater sums to sustainable and ethical mandates. However, it is not just the green labels on deals that are affecting investment decisions.

France increased the size of its Green OAT for the first time in 2019 on Thursday. The sovereign could follow up with a 30 year syndication as early as next week, said market participants.

On Thursday, Imperial Brands bucked the recent trend of ethical and sustainable corporate bond issuance, but found plenty of demand for its latest deal. The UK tobacco group had not accessed the bond market for more than two years.

Italy passed a test at the long end of the curve with a final order book of over €41bn for a 30 year syndication on Wednesday — far surpassing its previous record book that was set only last month.

GlobalCapital understands that the Spanish government has approved requests from the Balearic Islands and Castile and Leon to issue new debt. More approvals could follow “in the next few weeks” for the Basque Country and Galicia, according to a DCM banker based in Madrid.

Green bond issuance has been in hot demand so far this year with investors allocating ever greater sums to sustainable and ethical mandates. However, it is not just the green labels on deals that are affecting their decisions.

With SSA primary market conditions red hot, it would be wise for French public sector borrowers to crack on with their funding ahead of a double whammy of risk events in May.

Italy will test peripheral sovereign appetite in the long end after hitting screens on Tuesday for a 30 year syndication.