Europe

Bankers and investors have expressed their irritation at the US's new set of sanctions on Russia. The latest punitive actions stop US financial institutions from extending debt financing in the primary market to the sovereign.

Swiss investors who have been kicking their heels for the last month or so have been kept busy this week by Munchener Hypothekenbank (MunHyp), comfortably the most frequent international borrower in the Swiss franc market this year.

More borrowers are eschewing underwritten loans, causing frustration and concern among banks as their usually quiet corner of the market faces huge structural changes.

Another issuance dry spell looks likely for investment grade corporate bonds, with plummeting rates — and wider spreads — doing much to deter borrowers.

Issuers and investors are rapidly coming to terms with the idea that negative yields will become a permanent feature of the financial institutions bond market. Debt capital markets officials say that it is now only a matter of time before a bank plucks up the courage to sell a new senior bond with a sub-zero yield, following examples set in the covered bond market.

A senior bank investor buying for his firm’s liquidity coverage ratio (LCR) portfolio told GlobalCapital on Thursday that he does not fear negative yielding covered bonds. What he fears is a glut of long dated issuance that he cannot buy. But issuers remain unwilling to bring serious size with a negative yield.

SNCF Réseau steamed ahead with a new century bond issue this week, its second and largest deal to date, amid declining rates that has seen more and more investors take a risk at the ultra-long end in return for yield pick-up.

With emerging market loan bankers puzzling over what the latest round of US sanctions against Russia mean for syndicated lending in the country — an activity already well muzzled by proscriptions — Moscow bankers were defiant that they would be ineffective.

German agency KfW is “open to further business in [both] Singapore and Hong Kong dollars” as it looks to expand its recently updated green framework. Last week, the agency made its green bond debut in Hong Kong dollars, placing a two year private placement on August 2.

Rating: //AAA

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