Europe

A seismic shift has affected appetite in euro borrowing. Investors driven out to outlandish maturities by low rates have come flooding back to the belly of the curve.

Equity-linked issuance in Europe burst into life on Thursday with the sale of a €500m bond for Prysmian Cables & Systems and the first Japanese CB of any size since September. Then on Thursday evening Immofinanz launched another deal. The clutch of deals suggests the market is wide open for issuers.

In the leveraged loan market, where pricing has plummeted, it was inevitable that issuers would push their luck with the terms of their deals. Investors must push back.

The enduring nature of sterling covered bonds was underscored again this week with deals issued by Lloyds Bank and BayernLB taking this year’s total in the UK currency to six.

Italy took two steps forward in fixing its embattled banking system on Thursday, as UniCredit won shareholder approval for its €13bn rights issue, while UBI Banca shares surged on the news that it will seek to raise €400m to support a takeover of three retail banks bailed out in 2015.

ASB Finance and Met Life entered the Swiss market this week despite them having little need for the Swiss currency in their funding programmes.

Covered bond deals issued this week by Société Générale and Erste Bank showed that there is still good demand for bonds issued by national champions, even in the more difficult longer tenors.

Aggressive leveraged loan borrowers are pushing investors to breaking point. Sponsors have milked buyers’ desperation for yield with ever looser covenants to the extent that one investor said, this week, that the situation was worse than at any point since the financial crisis.

Ten year Pfandbrief €500m deals issued this week by NordLB and Bawag were narrowly oversubscribed even with the support of the Eurosystem.

Auckland Council on Thursday pulled off a 7bp tightening for its first ever public deal in euros. The trade was joined in the market by paper from the City of Hamburg and Bpifrance Financement.

A giddiness is entering the Russian loan market over the speed at which deals are lining up, with bankers looking for a bold reopening even as the country’s political relations with the US come under the growing glare of public scrutiny. Dan Alderson reports.

More public sector borrowers want to enter a red hot sterling market, including some that have barely visited the market in years.