Europe

On Thursday London & Quadrant Housing Trust became the latest issuer to tap the strong demand from sterling investors with a £500m 12 year and 40 year dual tranche structure. This was the second dual tranche sterling deal following Digital Stout’s £600m seven year and 12 year combination the day before.

‘Business as usual’ was the tone this week in emerging markets, after last week’s losses were reversed and mandates began trickling through from across CEEMEA.

On Tuesday Bright Food became the latest Chinese corporate to launch a euro bond in Asia. This has become a regular occurrence in recent months. However, this deal saw a higher than usual level of demand out of Europe, prompting some European bankers to speculate on what had changed the demand dynamics for this deal.

Telekom Austria took advantage of a lack of competing supply on Monday to tap its December 2026 issue. Investors liked the €250m no-grow deal enough for it to command a single-digit new issue premium.

On Wednesday Aroundtown became the seventh property company in the last month to sell bonds in Europe. It followed the trend of its peers by extending the maturity profile of its debt with a €500m 8.5 year transaction.

On Tuesday Nestlé issued its first bond since announcing a Sfr20bn (€18bn) share buy-back programme last month. Three rating agencies cut the Swiss foods group’s rating after the announcement, but there was no discernible drop in demand for this transaction.

Digital Realty used its Digital Stout Holding entity to sell a dual tranche sterling bond offering on Tuesday. The data solutions provider was overwhelmed with interest for its £600m deal, and will use the proceeds to rid DuPont Fabros Technology (DFT) of existing debt.

At current spreads UK covered bonds still offer good value even though a rise in the UK counter-cyclical capital buffer (CCyB) means international investors will incur a higher capital charge in buying the deal, said analysts at Citi.

Just a handful of this season’s IPOs are still live with the summer break fast approaching. With market jitters about rising interest rates, and investor trepidation towards certain asset classes, ECM bankers are praying the remaining deals go well after a couple of stinkers stripped the gloss off the market picture that some of the better sales had slapped on, writes Aidan Gregory.

Members of the European Parliament decided last week to accelerate their work on the creation of a new pan-European loss-absorbing debt class for banks, as proposed by the European Commission in November 2016.

Gazprom printed a further Swiss franc bonds on Thursday. The deal was less reliant on Russian lenders to reach the Sfr500m ($517.9m) capped size than its previous two Swiss bonds, as Gazprom has developed a strong reputation among Swiss, and wider European, retail lenders.

The pharmaceutical and consumer products sectors are well set to take advantage of the low cost of debt for M&A activity in the next 12-18 months, according to a report published on Thursday by credit rating agency Moody’s. But the actions of some companies suggest a different approach.