Europe

Europe's investment grade bond market has slowed from a sprint to a jog, and now to a walk. On Wednesday, Westlake Chemical Corp is the only issuer, taking the baton from the indefatigable Aroundtown, which had kept things going on Tuesday.

A new name hit screens on Tuesday announcing a roadshow. Air Baltic, an airline owned by the Latvian government, will meet with investors to promote a euro deal.

Prices on Deutsche Bank’s additional tier ones (AT1s) plummeted after the German lender announced a radical overhaul of its investment banking business this week, with bank capital investors still doubting the issuer’s ability to pay coupons on the instruments in the longer term.

Berlin Hyp this week attracted strong and broad interest for a green mortgage Pfandbrief that, thanks to a small rise in yields since the deal was mandated, narrowly avoiding being priced with a negative return.

The Italian benchmark FTSE MIB Index has risen more than 20% this year, buoyed by a rally in euro assets following the European Central Bank’s signal that it may adopt a more dovish stance and resume its bond buying programme. There is hope that this will translate into a strong market for Italian IPOs once the market reopens after the summer.

Greek debt yields have plummeted following elections in the country over the weekend, sparking renewed expectation from investors that a new bond issue from the sovereign is imminently due on screens.

National Bank of Greece said on Tuesday that it had picked banks to arrange a tier two bond transaction as part of its plans to raise €800m in the format. The bank could become only the second Greek issuer of subordinated debt since the financial crisis, following a new tier two from Piraeus last month.

Aroundtown, the German property company, chose Tuesday, when the European corporate bond market was otherwise empty of new issues to sell its second hybrid capital deal in as many months.

Rothesay Life reminded market participants of the rarely seen tier three bond format on Tuesday, raising £300m of solvency capital on the back of more than twice as much demand.

Last week’s tightly priced bond issue by KfW has inspired a slew of issuers to print three year dollar notes this week, a banker said. The Asian Development Bank was first off the blocks on Tuesday with a new benchmark, and Export Development Canada and Erste Abwicklungsanstalt are set to follow.

The UK Debt Management Office (DMO) issued its 60th syndicated bond on Tuesday and signalled a “smooth” start to the second quarter of its 2019–20 financial year, as it printed an inflation-linked tap that was eight times oversubscribed.

Investors piled into euro trades from Italy and the European Financial Stability Facility on Tuesday, with around €25.5bn of demand for the names as more issuers line up.