Europe

Toronto Dominion Bank issued the only two covered bond benchmarks in what was otherwise a desolate week for the FIG sector. Despite exceptionally volatile market conditions, the euro and sterling transactions went well leading a syndicate banker to conclude that TD "owns" the covered bond market.

With investors taking fright at Italian politics and volatility returning to the FIG market, finding an opportunity to press on with funding and bank capital raising plans will now be harder for less frequent, smaller issuers in Europe’s periphery countries. Three problem banks of recent times have each indicated plans to raise subordinated debt: Monte dei Paschi di Siena, Carige and Caixa Geral de Depósitos, and market participants will be keen to see what they do next, writes Jasper Cox.

The recovery of Turkish asset prices this week is less the result of prudent monetary policy — though that certainly helped — and more a lesson in the benefits of the personal touch and that markets are, ultimately, populated by humans.

Corporate bonds steadied in trading on Thursday, as better news from Italy produced a bizarrely strong rally in Italian government bonds. Corporate issuance is out of the question this week, but could come next week if markets continue steady.

Telecoms firm Lebara this week pushed back a deadline to avoid breaching reporting covenants of its only bond, a high yield note under Norwegian law, leaving some market participants worried about contagion.

The furore over the identity of Italy’s new government has seemingly put at least a temporary stop to its IPO market, with some sellers looking to wait until a semblance of stability returns. Other European markets are operating as normal but bankers remain on alert should volatility worsen, writes Sam Kerr

Goldman Sachs and three other major banks have signed up to the project to build a joint electronic bookbuilding system for the US investment grade market, joining Bank of America Merrill Lynch, Citi, and JP Morgan and giving the new platform a strong shot at total market dominance. Goldman’s merchant banking arm sold Ipreo, the main rival to the new project, last week.

Turkish dollar bonds outperformed in a heavy market this week after the Central Bank of the Republic of Turkey (CBRT) moved to simplify rates in order to protect the lira. The recovery of the lira to below TL4.5 to the dollar has been taken by the market to indicate that last week’s rate hike was a success.

Financial institutions are waiting for an all-clear signal in the primary market for unsecured debt, after an Italy-led meltdown cast new issue execution and pricing in doubt this week.

Government bond yields and swap spreads suffering a state of vibrato from the political fugue in Italy this week led to near silence across the primary public sector bond market. But issuers are hopeful a period of relative calm late in the week will last — although they admit investors are holding the baton.

Toronto Dominion Bank issued the largest sterling covered bond from a non-UK bank on Thursday. The transaction, which follows the issuer's successful euro covered bond on Wednesday and comes amid a dearth of FIG issuance, demonstrates the strength of the product and TD’s name.

Only the punchiest private debt players would commit this sentiment to public record, but they have a little secret: volatility makes their pitch that much sweeter. As the euro bond market scrabbles for stability, Schuldschein and US private placement agents are quietly spotting opportunity.