Europe

While European Central Bank president Mario Draghi kept firmly to his course of accommodative monetary policy at Thursday’s press conference, the euro strengthened further against the dollar, dragging Bund yields up with it. Lewis McLellan reports.

Sterling issuance was thin this week relative to its scorching start to the year although there was still room for Kommunalbanken to print its largest ever deal in the currency. Strong supply is on the way from the UK Debt Management Office but while demand is as good as some bankers have ever seen, other deals may be limited by technical factors.

Italy’s leading gas distribution company Italgas was the latest issuer to benefit from the lack of corporate bond supply so far in 2018, tapping a deal on Tuesday. Investors, starved of paper, have caused order books to be multiple times oversubscribed and issuers have benefited from tight pricing as a result.

Nordex, a German wind turbine manufacturer, began selling a €275m high yield bond this week as it plans to extend its debt maturities by taking out shorter-dated and floating rate Schuldschein paper.

Russian corporates have been quick off the mark in the bond market this year with two more following fertilizer company PhosAgro into bonds this week.

Corporate bond investors were offered 10 year and 11.5 year new issues on Wednesday and combined order books of over €4.4bn showed there is significant demand for longer tenors in this market.

Italian tyre company Pirelli returned to the bond market on Monday for the first time since its IPO. With no other investment grade deals in the market, the new five year transaction enjoyed strong investor demand and 40bp of tightening from initial price thoughts.

Syndicate desks and investors have been quietly voicing concerns about the lack of a firm pipeline in the corporate bond market. Going into the final week of the month, January volumes of new issuance are likely to come in under that registered in 2017, although a trio of French issuers did alleviate some of the pent up demand this week.

SNCF Réseau has hit screens for a 30 year bond to be sold this Friday. The borrower announced the mandate just after the completion of the European Central Bank's governing council meeting press conference on Thursday.

Shares in Dechra Pharmaceuticals, the UK veterinary pharmaceuticals company, closed 8.7% higher on Thursday after the company raised £105m of new capital to partly finance its acquisitions of AST Farma and Le Vet in the Netherlands.

Equity investors seem to be shrugging off the geopolitical tension surrounding Turkey, which is fortunate for a pipeline of Turkish IPOs, but there are risks if relations with the US worsen further, writes Sam Kerr.

Two influential derivatives trade bodies have questioned elements of a European Commission proposal that would centralise supervisory powers with pan-European securities watchdog ESMA, arguing that national supervisors have a “strong knowledge of local markets” and that the move seemed “premature”.