Europe

A pair of dollar deals on Wednesday showcased what bankers felt was a theme during a week with a volatile market backdrop, as a top tier name tightened pricing and was comfortably oversubscribed, while a second tier issuer was able to get a deal away but could not move in from price thoughts.

The Council of Europe Development Bank (CEB) is planning to bring its second ever social inclusion bond in the spring, and has outlined to GlobalCapital the expected currency and tenor. The State of North Rhine-Westphalia also looks set to bring an SRI bond, after mandating banks on Wednesday for a roadshow.

The €478m IPO of Instone Real Estate, the German home builder, is covered at its full size, less than four working days into the bookbuild.

United Utilities became the third corporate issuer to sell a sterling bond in 2018, when it printed a seven year deal 24 hours later than initially planned. The company held an investor call on Monday, but then paused for a day due to global markets' volatility, before launching the deal on Wednesday.

Fitch has warned in a report that there is no certainty that covered bonds will retain their large overcollateralization buffers (OC) during the course of their life, in the absence of a contractual commitment.

ING Groep brought a senior deal from its holding company on Wednesday, undeterred by financial bonds selling off earlier in the week.

Rival bankers are keenly watching Credit Bank of Moscow’s trade as a barometer for the market this week. A sell-off in US Treasuries seemed to imply a higher borrowing cost for the issuer, though with price revisions to come, it is too early to say by how much.

The plunge in global stock prices has only caused the European investment grade corporate bond market to close for one day. On Wednesday, two pharmaceutical companies from different ends of the the ratings spectrum brought multi-tranche deals which attracted more than €9.5bn of combined demand.

The focus of most debate in financial markets this week has fallen on whether the equity market sell-off was merely a correction or something longer lasting and more serious. The corporate bond market, however, has viewed it all in a much more sanguine way.

A battering in the US stock market sent ripples through financial markets on Monday and Tuesday but, with stability returning, investors are keen to put money to work while higher yields are available. But one opportunity to do so was snatched away from them on Tuesday.

Investors showed their preference for additional tier one (AT1) deals with a short time until their first call dates this week, as they looked to reassess the sector’s value amid a bout of volatility.

Panda bond issuance has so far been dominated by overseas-incorporated Chinese names. That bolsters volumes, but it does little to help the market fulfil its role of boosting RMB internationalisation. Policymakers have the chance to fix it — but only if they are bold enough to let markets play a bigger role.