Europe

The European Central Bank is not expected to provide too much detail on its forthcoming asset purchase programme on Thursday and will probably wait until September, bankers believe. Covered bonds have room to perform but, given negative yields and uncertainty over the scale and composition of purchases, not by much.

Industrial and Commercial Bank of China tapped the sterling market through its London branch on Wednesday to become the first Chinese bank to sell a senior benchmark bond in the currency. Demand was driven by an anchor investor, with the lead managers increasing the size of deal to satisfy as many orders as possible.

Air Baltic, an airline 80% owned by the Latvian government, printed its €200m five year non-call three debut bond on Tuesday from an order book of €300m.

Equity capital markets investors say they will continue to stand firm on valuations and will not be pressured by aggressive sellers into buying deals that they think are too expensive.

Turkey’s bonds have put up an incredible display of resilience to geopolitical shocks so far, but investors fear that an aggressive cut to the main policy rate will cause inflation to return and puncture confidence in the country’s economy.

With last week's high yield bonds performing well, a range of new deals has been brought to market to take advantage of strong demand. That was a complete contrast to the investment grade market where no new deals were announced on Wednesday.

The UK Debt Management Office sold a new 10 year Gilt via auction on Tuesday that was priced with its second lowest yield in history. Investors piled into the haven asset as the risk of the UK crashing out of the EU without a deal rose following Boris Johnson's anointment as leader of the ruling Conservative Party.

Participants in the financial institutions bond market have questioned whether the European Central Bank could begin buying senior unsecured bonds from banks, as part of a more aggressive quantitative easing programme. But analysts have been quick to dismiss the idea as implausible.

Cofco International, a commodities trading unit of China’s agri-products company Cofco, has increased its sustainability-linked loan to $2.3bn after receiving commitments from 21 lenders.

An acquisition of British pub giant Ei Group by its smaller competitor Stonegate is about to trigger a clause that allows Ei Group to redeem £1bn of its senior secured bonds at par. Secured bondholders will likely have to swallow a pint of bitter if the sponsor behind the deal does not budge.

London’s capital markets are again under threat of severe disruption as the UK’s clown prince in chief, Boris Johnson, became prime minister this week.

UK housing association Catalyst Housing came back to the sterling corporate bond market on Tuesday with £50m of the £100m it retained from a £250m long dated dual tranche bond issue, which was priced in October 2017. The deal was illustrative of the buoyant conditions for borrowers.