Europe

Falling oil prices and China concerns sent credit spreads to the record wides of recent years this week as equity markets plummeted, with a credit index options expiry coming right at the sharp end of the spike and adding to the turmoil.

Emerging market bankers are saying that greater scrutiny may now need to be paid to the ratings calendar when printing bonds after Standard & Poor’s downgrade of Poland on Friday prompted one of the worst sell-offs of an EM new issue in recent memory.

Poland’s sovereign bond spreads are in turmoil, after a shock downgrade by Standard & Poor’s (S&P) late last week. The move follows a sharp drop in its political risk score in the latest Euromoney Country Risk (ECR) survey.

European stocks rose on Thursday, as European Central Bank president Mario Draghi offered a supportive, if vague, acknowledgment of the market’s struggles. But bankers said they would need several consecutive days of rising markets to regain confidence in this quarter’s prospects for primary issuance.

FMS Wertmanagement has launched two separate tender offers on the Irish Stock Exchange for euro, Swiss franc, US and Canadian dollar denominated covered bonds issued by Depfa Bank and Depfa Pfandbrief Bank SA.

Bank Nederlandse

Compagnie de Financement Foncier had been expected to open books for a 10 year benchmark on Wednesday, but postponed the deal blaming market conditions. Rival bankers said the long tenor was the wrong choice for the weak market.

UK banks could look to stockpile their funding in 2016, as the country’s forthcoming EU membership referendum will cause capital markets to snarl up later in the year.

The economies of Italy and China do not appear to have much in common. Italy’s government would welcome a GDP growth rate of 1%, while China expands at less than 7% and investors take flight. One is a sclerotic, decaying Western country, the other is a dynamic Asian tiger. Such is the conventional wisdom.

Crédit Agricole issued the one and only covered bond of the week on Thursday and showed that it is possible to get a strong outcome in a tough market.

Renewed concerns about Italian banks’ high levels of non-performing loans triggered a severe sell-off of their subordinated bonds this week, as the market enters the new bail-in era.

Biotechnology Research And Information Network, the German biotech business, has set a price range of €9 to €12 a share for its Frankfurt listing, implying a market cap of €148m to €197m.