Euro

The European Central Bank was confident enough in the state of the European economy to confirm on Thursday that it will cut its monthly bond purchases from €30bn to €15bn from October and that it still expects to close the programme at the end of 2018. While some credit traders welcome the move, others are worried that secondary market liquidity in corporate bonds is already starting to decline, writes Nigel Owen.

Italian multi-utility Iren highlighted the improving sentiment around Italian corporate bond issuers when it priced a €500m seven year green bond 15bp tighter than where similarly rated peer 2i Rete had printed a non-green deal the previous week.

French building materials producer Saint Gobain received overwhelming demand for its second benchmark issuance of 2018. A combined order book of €7bn meant the issuer could have sold a much larger deal than the €1bn size limit it imposed on itself.

Dutch registered machinery and vehicle manufacturer CNH Industrial achieved an order book nearly three times oversubscribed for its first corporate bond sale since Standard & Poor’s raised the company rating to BBB.

Italy’s upcoming budget is far outstripping anything that might come out of this week’s European Central Bank meeting in terms of investor concerns, with one portfolio manager suggesting BTPs could come under further pressure in the run up to the announcement.

Like many corporate bond market participants Bluebay Asset Management has been keeping a close eye on the volatility that has been and likely will be further caused by emerging markets, political events in Italy and the ongoing Brexit negotiations.

Spain reopened the post-summer peripheral sovereign market in style, achieving its largest order book for an inflation linked bond since its inaugural trade in the format in 2014.

Caisse des Dépôts et Consignations drew healthy demand on Tuesday as it tapped what bankers are calling the "sweet spot" for euro issuance.

The positive tone in the corporate bond market and some excellent recent results for those issuers who have sold new deals has resulted in a number of companies announcing plans for transactions. The buoyant pipeline is a cause of optimism among bankers, despite no deals being marketed on Tuesday.

Agence Française de Développement was comfortably oversubscribed and able to pull in pricing by a basis point from guidance with a climate bond issue on Monday.

Public sector euro benchmark supply is set to restart after a lull last week, with a eurozone sovereign and a French agency hitting screens on Monday for pricing on Tuesday.

Swiss flavours and fragrance manufacturer Givaudan is a regular user of the Swiss franc corporate bond market, but sold its first euro deal this week to help refinance the funding of its €1.25bn acquisition of French natural ingredients supplier Naturex.