Europe

Rabobank has issued the largest covered bond of the year, drawing the biggest and most granular order book for any covered bond in over five years in the process. The stellar reception illustrated the issuer’s broad reach and confirmed that the full gamut of covered bond buyers are now back.

The European Central Bank (ECB) is not yet in ‘policy mode’ its president Mario Draghi said on Thursday, refusing to be drawn into speculation around the potential for a third series of targeted longer-term refinancing operations (TLTROs).

Thames Water sold roughly £220m of US private placement notes this January.

ECM bankers have found investors more receptive to blocks than expected so far this year. Nonetheless, buyers have demanded more from sellers before they commit to a deal, a trend in evidence in the €55m share sale in Biocartis on Wednesday night.

Banco Comercial Português got away an additional tier one bond deal on Thursday, showing demand is present for a risky credit profile, but at a high level. The bond will suffer from higher than average coupon risk.

The Republic of Turkey has returned for a bond in euros after the $2bn note it sold earlier this month rocketed in value.

The public sector dollar market on Wednesday showed that it had more than enough depth to cope with a pair of issuers bringing deals in the same maturity with just a basis point of difference in initial price thoughts, as both trades came in size and at tightened pricing. Another agency is set to dip into the demand on Thursday.

Rolls-Royce & Partners Finance (RRPF), a structured aero-engine lessor owned by GATX Corp and Rolls-Royce Holdings, has sold a $700m US private placement (PP). It’s the fourth time it has entered the market, and the second in 12 months.

Sentiment has changed in the covered bond market. After almost a year of spread widening, a new pricing equilibrium has been reached.

Four covered bond issuers returned to the market on Wednesday and, in contrast to the start of the year when concessions were 5bp-7bp, none paid more than 2bp.

Following the success of Engie’s green hybrid bond the previous week, the French energy company’s Portuguese peer, EDP, launched its own version on Wednesday. While EDP’s deal did not achieve quite the same demand or tight pricing, the result was still a good one.

SCBC chose to issue its first green covered bond in its home currency this week, saving itself a few basis points compared with euros — where a green covered bond is now considered 'feasible'.