Europe

Rating: Aa1/AA+

Guarantor: Federal Republic of Germany

The sterling public sector market was on pause this week as the UK parliament held a series of votes to determine the outcome of Brexit this week.

The lacklustre EMEA high grade loan market saw a ray of hope on Thursday, when president of the European Council Donald Tusk called for a “long extension” to the UK’s Brexit deadline.

The exceptionally strong demand in Europe’s corporate bond market has remained unaffected by the turmoil in the UK’s Parliament, as MPs vote night after night on repeated motions that could determine the country’s future inside or outside Europe. On Thursday, two issuers attracted huge books: Marsh & McLennan Companies, the US insurance and investment services group making its debut in euros, and Incommunities Group, a Leeds-based housing association, in sterling.

Intesa Sanpaolo took advantage of the search for yield among Japanese investors this week to make its second outing in the Tokyo Pro-Bond market.

Kosmos Energy on Thursday announced a new seven year Reg S/144A dollar bond, callable in 2022.

An uptick in Russian equity capital markets (ECM) activity this week buoyed bankers and investors, who are hoping a freeze caused by US sanctions is thawing, write Sam Kerr and Aidan Gregory.

The African Development Bank sold a 10 year benchmark in euros on Thursday that bankers said priced through fair value. Land Schleswig-Holstein was also in the market for the same tenor that extended its curve to 2029.

European high yield investors are as eager to buy bonds as their investment grade counterparts — the difference is, while IG issuers have been pouring paper into the market, high yield has been in a drought. But that is at last starting to break.

The Monetary Authority of Singapore (MAS) is considering making covered bonds eligible for repo, but Singapore dollar issuance would probably be needed, delegates at the Euromoney/ECBC Asian Covered Bond Forum heard this week. Domestic currency issuance would improve the resilience of Singapore’s banking system and potentially encourage other banks to set up programmes.

Banco BPI mandated lead managers for a five year Portuguese covered bond on Thursday — the first from the country since October 2017. The announcement suggests borrowers have a good reason to hit the market even though they will be able to fund more cheaply by tapping the European Central Bank.