Europe

Investors in Europe’s leveraged finance markets have started to fight for better pricing and deal terms. But a lack of supply is playing in borrowers' favour.

Investors want the Association for Financial Markets in Europe (Afme) to bulk up their fight against loose high yield bond terms. Afme wants high yield investors to pay a fee for the first time. With borrowers only now tentatively coming back after an unusual risk off pause, this week’s confrontation between Afme and some investor members will add uncertainty to new deal pricing, said market participants.

The State of North Rhine-Westphalia on Thursday brought the first 20 year euro benchmark of the year from a core eurozone issuer, for which leads said the “stars aligned”. A sell-off in rates, core SSAs stability in the face of wider market volatility and a healthy spread over OATs all helped the deal, they said.

Christopher Giancarlo, the chairman of the Commodity Futures Trading Commission, will visit European regulators in London, Brussels, Frankfurt and Madrid next week in an attempt to defuse European efforts to alter unilaterally the supervision regime for foreign clearing houses.

Rating: Baa1/A-/—

Beni Stabili printed a “gutsy” investment grade corporate trade at the start of the week. The BBB- rated Italian firm managed to attract investors despite plenty of background noise, though bankers said it may send other prospective issuers mixed messages.

United Overseas Bank has mandated joint leads for a covered bond roadshow in the UK with a view to potentially issuing its sterling debut. Singapore peer DBS Bank undertook a roadshow in the UK two years ago but did not follow up with a deal.

German car rental and leasing company Sixt sold just the second corporate bond issue of the week when it copied the format of its four previous deals, which the company has sold at two year intervals.

Creval, the Italian bank, has kicked off its fully underwritten €699m rights issue, having announced the price range late on Wednesday evening.

Gatwick Funding has received its first rating from Moody’s for its £5bn-equivalent multicurrency MTN programme, prompting investors to expect a new sterling issue from the UK airport group soon.

The euro private placement market is seeing volumes rise to the highs reached in 2013-2015 as corporates push ahead with funding in the hope of beating European Central Bank interest rate rises expected later this year.

Covered bond investors are setting more conditions on their orders, joining order books later, and limiting tenors they will buy, anxious to avoid buying bonds that will underperform. Despite the picky investor base, Swedbank still raised a €1bn five year at a record tight spread.