Europe

The sterling SSA market snapped back into life with a flurry of new deals after a quiet few weeks — although bankers lamented that the issuance door may have closed just as quickly as it opened.

The widening of the dollar Libor/Overnight Indexed Swap (OIS) spread may be one of the biggest talking points in bond markets but it is wrenching open funding opportunities for public sector borrowers. The accompanying widening in dollar swap spreads led two issuers to break new issue records, writes Craig McGlashan.

European leveraged finance primary markets are roaring back into action, pleasing hungry investors this week. Borrowers and investors appear eagerly engaged in a stream of transactions that recalls the strong start of the year.

Financial institutions stretched the appetite of bond investors to breaking point this week, flooding the euro market with nearly €15bn of deals, which struggled to perform in secondary despite carrying large new issue concessions.

Corporate bond issuers who sold their deals earlier the week found execution much easier than those who came later in the week. Strong order books and single digit new issue premiums gave way to premiums of as much as 20bp and one deal having to be downsized.

Dutch supermarket operator Ahold Delhaize is becoming a frequent issuer, as it sold a dual tranche deal this week, six months after its return to the market from a five year absence.

UK media company WPP sold a dual tranche bond this week, following its own recent trend for issuing shorter tenors with its most recent euro issues.

Sanofi, the French pharmaceutical company, this week priced the largest European corporate bond deal of 2018 — an €8bn six-tranche deal. The company used only European banks as global co-ordinators for the sale, as the euro market proved that it is a viable market for jumbo financings.

While the euro primary market was running hot for financials this week, four banks also went to the sterling market for £1.625bn of senior funding, mainly concentrating on the shorter end of the curve.

Spanish telecoms company Telefonica announced the sale of new hybrid issues this week while also tendering for several of its outstanding hybrids. After more than a month since the last benchmark euro hybrid issue, investors contributed to an order book exceeding €4.5bn.

E.On is expected to re-lever its balance sheet to support its new, more pedestrian business mix after its acquisition of Innogy is completed in 2019, according to analysts at Bernstein.

Volkswagen’s real estate arm launched a debut green Schuldschein on Wednesday, the first of the year.