Europe
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All eyes are on Banco Santander in the run-up to a busy 2019 for additional tier one redemptions. Brutal trading conditions have left the Spanish bank at high risk of becoming the first issuer to leave a deal outstanding past its first call date. Tyler Davies reports. -
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Another bruising week for equities is testing frayed nerves in equity capital markets, with this week’s US tech-stock sell-off adding to worries about issuance in 2019, writes Sam Kerr.
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Public sector borrowers are gearing themselves for wider spreads and bigger new issue premiums in the euro market in 2019 following the expected end of the European Central Bank’s public sector purchase programme. The bigger and more liquid names will determine the environment for the rest of the market, according to SSA bankers.
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The US private placement market (US PP) processed two sterling transactions last week, when TSB was forced to pull its prospective covered bond and VW had to pay elevated new issue concessions to access the sterling bond market. US PP agents believe this once again demonstrates the US PP market’s comparative stability against public markets.
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The European Council and Parliament overcame deep disagreements to reach a provisional agreement on a new version of the bank recovery and resolution directive (BRRD 2) this week, which includes cap on MREL requirements that will help Europe’s lowest-risk banks. The breakthrough has lifted hopes that EU lawmakers will approve a broader overhaul of European financial regulation before the European Parliamentary elections in May.
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UniCredit will likely become the first commercial bank to finish a year in the top two arrangers in the Schuldschein market. As the market internationalises, many believe commercial banks are well placed to challenge the Landesbanks’ grip on deal flow.
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Instituto de Crédito Oficial (Ico) is eyeing up its first ever green bond in 2019 following a series of social bonds.
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Kommuninvest was the sole dollar benchmark in the public sector market this week, getting in just a day ahead of Thanksgiving to reach its 2018 funding target. Dollar SSA supply is likely to be limited for the rest of the year, but there is room for "opportunistic" trades at the short end, according to bankers.
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Investors have become more cautious about a popular derivatives volatility trade amid concerns of increased US equity turbulence in the weeks and months to come.
