Europe

Nordea issued a €1bn seven year bond on Thursday and attracted the highest subscription ratio of any euro covered bond of this size in 2018, while pricing with a tiny new issue premium. The execution offers further evidence that covered bonds are on a solid footing, in contrast with other sectors.

Fixed income investors say that some banks have unrealistic expectations about where they can price new bonds — an issue that could prevent deals from arriving before the summer.

Turkey’s Isbank has signed a $1.48bn-equivalent syndicated loan in line with the existing pricing benchmark for its compatriot peers, again showing that rating downgrades have little effect on loan borrowing rates for the country’s banking sector.

As independent advisers take centre stage on the biggest deals, they will attract greater scrutiny, and their big selling point — freedom from conflicts — could be diminished, writes David Rothnie.

Talos Capital reduced the size of its stake in Aena, the Spanish state-owned aiport operator, through a €696m accelerated bookbuild led by UBS and Citigroup on Tuesday.

Hermes has launched a European direct lending fund, as the investment manager looks to carve out part of a market that has recently reached record highs by volume.

Kommuninvest printed a $1bn three year dollar bond on Wednesday, following the example set by Swedish Export Credit Corporation (SEK) but shaving an extra few basis points from its spread.

Speculative grade investors are being tempted by higher total returns in the leveraged loan market, but lack of supply and growing demand is favoring a loosening of default protection covenants.

In a document recently circulated at EU level, Paris labelled the MiFID II equivalence regime “inappropriate”, and called for a tighter procedure — a clear move to limit UK funds’ access to EU markets after Brexit.

Erste Group Bank decided not to issue its additional tier one (AT1) bond on Wednesday after FIG bonds were hit by wider moves in the fixed income market. But elsewhere in the subordinated debt market Banque Fédérative du Crédit Mutuel did press ahead with a bullet tier two deal.

Investors moved to reduce their positions in Italian bank bonds after a leaked document on Tuesday night showed that the Five Star Movement and Lega parties were considering introducing a number of controversial policies should they enter into a governing coalition.

A leaked draft of a coalition agreement between Five Star and the Northern League, which are in discussions over forming a government in Italy, caused investors to dump Italian debt, blowing BTP yields out by 9bp.