Europe

Climbing US Treasury yields and tightening swap spreads are pushing out levels in dollars, but Swedish Export Credit Corporation (SEK) managed a successful three year trade — a good omen for an upcoming deal from Kommuninvest on Wednesday.

On Tuesday, Italian energy company Enel sold €1.25bn of new hybrid bonds to help fund the repurchase of its hybrids with 2019 and 2020 call dates. The buyback was announced after the firm’s chief financial officer announced that the company would refinance up to €3.5bn of hybrids at a cost of about 3.5%.

Analysts have reacted with surprise but not frustration after Vodafone’s chief executive officer Vittorio Colao announced he was stepping down on Tuesday. New boss Nick Read looks likely to have a tricky task ahead of him to retain the company’s credit rating amid its €18.4bn debt-financed acquisition.

The resilience of Italy’s benchmark FTSE MIB index to the growing political risk in the country suggests investor sentiment towards Italy is still favourable. But Italian equity capital markets bankers are understandably nervous that the expected coalition government of the Five Star Movement and Northern League could change investors’ minds.

German chemicals company BASF found substantial demand for its second visit to the corporate bond market to fund its acquisition of Bayer’s seed business.

Swiss biopharmaceutical company Polyphor has bucked the trend of recent European IPOs by pricing its IPO at Sfr38, in the top half of the initial Sfr30 to Sfr40 range, and increasing the size of the deal.

The volume of euro and sterling high yield bonds on sale in Europe jumped to €1bn on Tuesday, after NBG Pangaea and Premier Foods hit the market with new offerings. Meanwhile, retail high yield funds enjoyed a second week of inflows.

Deutsche Pfandbriefbank (PBB) priced an Aa1 rated six year Pfandbrief on Tuesday at the same spread as Deutsche Bank’s Aaa rated five year issued last week, showing the market has improved. But, with tighter monetary policy recently signalled and more supply due, the advantageous funding window may prove short lived.

BNP Paribas and OP Corporate Bank both marketed floating and fixed rate bonds in the euro market on Tuesday, with the latter able to offer a smaller premium because of its rarity in the capital markets, according to one banker away from the deals.

Erste Group Bank is preparing to sell its third additional tier one bond as part of a deal that would reopen the market for the first time in nearly a month.

Loans bankers are keeping their cool over Turkey’s sharply deteriorating lending conditions, though borrowers in the country with a majority lira revenue and hard currency exposure have been warned that tough times are head.

A senior member of HSBC’s EMEA leveraged finance team has left the bank, according to sources.