Europe

Investors are looking to put cash to work in the primary European government bond market after yields failed to rise as the European Central Bank's Public Sector Purchase Programme (PSPP) ended as had been feared.

A stronger performance in credit markets in recent weeks has lifted spirits, but investors remain concerned about signs that economic growth is still slowing in Europe.

The US sanctions slapped on Petroleos de Venezuela (PDVSA) this week look similar to those that have just been removed from Russia’s EN+ and Rusal. The move indicates that the US believes in the effectiveness of sanctions and is happy to keep deploying them. Emerging markets investors should beware.

Whatever the resolution of the UK’s attempts to leave the European Union, it will likely take a long time for it to repair its reputation among investors.

Kommunalbanken took advantage of being the sole SSA issuer in dollars on Tuesday as it was more than twice subscribed and tightened pricing on its first dollar benchmark of the year. Concerns over volatility from this week’s US Federal Open Market Committee meeting and non-farm payrolls kept some other issuers on the sidelines, said SSA bankers — although two are braving Wednesday’s market.

KfW brought yet another record breaking trade to the SSA market in 2019, printing a five year euro benchmark whose order book volume was an all-time high for the issuer.

Greece has cash. It didn’t need to take €2.5bn of five year bond funding from the capital markets on Tuesday. But the deal was a good tactic to demonstrate that it has access to new capital, which will ultimately push down its borrowing costs and push up its credit ratings. It worked for Portugal, so why not Greece?

The only large European IPO being actively marketed, the Paris flotation of logistics company Gefco, has been delayed. Banks on the deal are holding fire on a launch until they can find a better window.

Siberian Coal Energy Co (Suek) is set to tap the market to refinance an existing pre-export credit facility, according to bankers. The borrower is usually one of the first Russian names in the market, and is notable for its robust liquidity position.

Greece’s highly anticipated return to the public bond markets on Tuesday met with a strong reception from investors. With up to €4.5bn more of benchmark bonds to issue in 2019, Greece is expected to return to the markets for a second syndication this year, which bankers say could be in the 10 year part of the curve. Cyprus will look to follow up on Greece’s success after setting out plans to roadshow a euro transaction in February.

Austria's 10 year syndication on Tuesday received a final order book that was almost twice the size of its previous record volume. Belgium was also in the market with its second OLO of the year, opting this time for a much longer maturity. Both deals were in keeping with eurozone sovereign supply this year, comfortably printing a combined €10bn from over €55bn of orders.

Asahi has agreed to buy UK alcohol maker Fuller, Smither & Turner for £250m, with the debt-funded purchase expected to be positive for the Japanese brewer’s credit metrics.