Europe

It was the deal the corporate bond market had been waiting for. German pharmaceuticals company Bayer had flagged a €22bn bond equivalent bond deal to finance its acquisition of Monsanto. The deal was executed efficiently in the dollar and euro markets, but what wasn’t expected was the wave of confidence that washed over the rest of the European corporate bond market as a result.

Fierce competition for clients among law firms advising borrowers and investors is stoking up disputes over loosening bond covenants, said high yield market participants in Europe this week. The number of deals pulled has already surpassed 2017 figures as a result, but both sides in the battle show little sign of giving way. Victor Jimenez reports.

Sovereign debt officials praised the role primary dealers played during the volatility that hit eurozone government debt markets in the second quarter, though some still feel the system is “not ideal”.

Volkswagen used the slipstream of the upbeat corporate bond market this week to print the largest corporate hybrid bond deal of the year to date. The dual tranche offering garnered €8bn of demand.

Danske Bank’s additional tier one note struggled to remain above water in the secondary market on Thursday as subordinated financials debt across Europe sold off. Other banks with plans to issue the instrument will be watching the market closely.

Governments’ interest in issuing green bonds remains very patchy, despite the rapid growth in other parts of the market. Among large banks, issuing green bonds now seems almost de rigueur, but that is certainly not the case for governments.

CNP Assurances was more than three times subscribed on Wednesday as it issued the first restricted tier one bond in euros at a benchmark size.

The sterling bond market was alive with bank issuance ahead of a Bank of England meeting this week, with Metro Bank testing investor appetite with a debut, unrated tier two deal.

Canadian Imperial bank of Commerce this week issued the first dollar covered bond in 144A format this year. The funding, which was much cheaper than the cost of raising a similar deal in dollar senior format, could well unleash a slew of supply, mostly from Canadian banks but also potentially from European names.

The European Investment Bank has released initial price thoughts for a sterling benchmark floater referencing Sonia — a trade that dominated many conversations at this week's Euromoney Global Borrowers conference in London. The deal will be priced on Friday.

Poland’s domestic bond market is not as big as participants would like it to be. It needs standardised documentation, they say, along with more ratings and the adoption of transparent, fixed rate coupons. Philip Moore reports.

Polish GDP impressed in the first quarter of 2018, growing 5.2% year-on-year, up from the 5.1% estimated, driven by higher consumption and investment in infrastructure co-financed by EU funds. Ukrainian migrants have also boosted GDP. But with proposed cuts to EU funding set to hit Poland hardest — at a cost of 1% of GDP a year from 2021, according to some estimates — the outlook is not so rosy. Virginia Furness reports.