Europe

Bank of Nova Scotia and Lloyds Bank both offered covered bonds in the floating rate note format to sterling investors on Wednesday, while Stadshypotek announced a mandate for a similar deal.

Compagnie de Finacement Foncier (CFF) was unable to attract a swell of demand for its 10 year, possibly due to the tight starting spread. In contrast, yield hungry investors flocked to ABN Amro’s mega-sized 15 year offering.

Caixabank brought the first covered bond deal of the year from Europe’s periphery on Wednesday but its offering appeared to struggle for attention on a busy day in the covered bond market.

The SSA market is off to a typically fast start, with four deals in the market and more expected. However, a newly aggressive tone from members of the European Central Bank governing council could rock the boat.

The lack of volatility combined with the continual grind tighter of spreads of investment grade corporate bonds meant investors in the asset class enjoyed good returns in 2017. Similar conditions look set to prevail at the start of 2018, but investors need to maintain vigilance.

Siberian Coal Energy Co (Suek) and Russian Copper Co are expected to sign pre-export finance facilities after launching their deals before the end of 2017.

Emerging market bond fund managers say they are markedly more optimistic than 12 months ago when the "whole world was negative" after the start of Donald Trump’s US presidential term. And with plenty of sovereign trades rumoured for January, there is an abundance of investment opportunities.

An optimistic mood is spurring on Europe’s equity capital markets, with a busy quarter expected, particularly for IPOs.

The London Stock Exchange this week reaffirmed its commitment to open access under the second Markets in Financial Instruments Directive, as major European exchanges and clearing houses (CCPs) were granted exemptions from the requirement until July 3 2020.

China’s central bank will hold on to its 'neutral and prudent' monetary policy, the central bank of Pakistan encourages businesses to trade with China in renminbi, and the Chinese currency regains its position as the sixth most used global payments currency.

The European Central Bank’s decision to exclude conditional pass through (CPT) covered bonds issued by non-investment grade issuers from its covered bond purchase programme (CBPP3) will constrain liquidity and credit where they are most needed, and is not necessarily justified by risk considerations.

Whether MiFID II will affect the Schuldschein market is often discussed in Frankfurt. As collections of bilateral loans, Schuldscheine are exempt from the regulation — leading some to predict a boon for the asset class. But the optimism in some quarters is overdone.