Euro

European government bond yields have climbed in the wake of an unusually hawkish turn in the tone of comments from members of the European Central Bank's governing council.

A number of corporate bond issuers are taking advice from their bankers about accessing the market, but the new issue premiums paid by Volkswagen Bank and Carrefour put them off from launching their deals on Wednesday.

After a volatile May, which ended with a week of no corporate bond issuance as market volatility and public holidays took their toll, investors have welcomed the slow, steady pace at which supply has returned.

Slovakia sold 10 year and 50 year bonds from a combined book of over €5bn on Tuesday, the first European sovereign bond since Italy-led volatility last week turned government bond traders’ screens into a kaleidoscope of reds and greens. It was also the longest CEE print in over a decade.

Industrial and Commercial Bank of China’s London branch issued a $1.5bn-equivalent green bond on Tuesday, becoming the third big Chinese bank to hit the offshore debt market with floating rate notes in less than a week.

The Basque Government’s return to bond markets on Tuesday after a more than two year absence suggested that investors are not duly concerned about Spain being caught up in volatility last week, with orders ploughing into the debut sustainable bond issue.

Rentenbank on Tuesday sold what Dealogic data shows is its largest ever euro benchmark, while the State of North Rhine Westphalia visited the long end of the curve.

Carrefour, the French supermarkets group, sold Europe's second corporate bond deal of the week on Tuesday, as the market slowly recovered from the volatility of the previous week. There still remained some nervousness around market conditions, however, so Carrefour had to ensure it offered investors a healthy premium.

The State of North Rhine-Westphalia (Land NRW) hit screens on Monday to announce a long dated euro benchmark.

The Basque Government will bring the first real test of investor appetite for Spanish public sector risk since a wave of Italy-led volatility hit the eurozone periphery last week, as it opened proceedings on an inaugural sustainable bond — its first issue of any kind in over two years.

On Monday, Volkswagen reopened the euro corporate bond market after a blank week. The German car company’s financial arm was the only corporate issuer to brave the market on the day and, despite issuing a €1.5bn triple tranche deal, kept its longest maturity at six years.

Government bond yields and swap spreads suffering a state of vibrato from the political fugue in Italy this week led to near silence across the primary public sector bond market. But issuers are hopeful a period of relative calm late in the week will last — although they admit investors are holding the baton.