Europe

The European Central Bank could bring the shorter end of the euro curve back into play for public sector borrowers next week if it opts to cut its deposit rate once again, as super low yields led one market participant to describe a seven year euro benchmark by Finland this week as targeting the “short end” of the curve. Craig McGlashan reports.

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European investment grade corporate bond issuance sped straight out of the blocks as bankers drove eight new issues totalling €7.25bn into the primary market in the space of two days.

Raiffeisenlandesbank Oberösterreich has mandated joint leads for its first benchmark euro covered bond and the Bank of Queensland has hired leads to explore options for a potential structure.

Covered bond investors believe new issue premiums will probably rise in the near future leading to a repricing of the market. But with buyers anxious to put their glut of cash to work in almost anything, the prospective move is likely to prove moderate.

Central bank monetary policy has squashed the yield out of all but some of the hairier parts of Europe’s credit markets. But despite mounting pressure to hit investment targets, high yield bond buyers in particular are proving a picky bunch when it comes to investment decisions, writes Victor Jimenez.

Inmarsat, the satellite communications company, this week sold the first convertible bond since July.

DNB Boligkreditt issued a larger than average euro benchmark 10 year covered bond at a spread that was arguably flat to its curve this week, showing solid demand for non-Eurozone deals that still offer a substantial pickup to core markets.

After another week of a super solid dollar market, public sector bankers are starting to refer to the currency as “darling” — and all the signs suggest that the relationship is set for an extended honeymoon.

The pressure is on market participants and regulators to up their green game, as November’s COP22 conference in Monaco November approaches. Stakeholders will want to get as much done as they can to define green bonds before governments get involved.

The United States has unseated the United Kingdom from its long dominance of over-the-counter interest rate swaps (IRS) trading, according to an industry report this week.

Showing flexibility over Caixa Geral de Depósitos latest recapitalisation may not have been such a bad decision, but by using logic inconsistent with other cases the European Commission risks making its state aid rules appear arbitrary and meaningless.