Europe

Bank market makers in credit index options got hammered twice in the past week, as a spike in spreads caught them long volatility after an unprecedented month-long market lull.

Commerzbank this week became the latest bank to lose its place on a sovereign’s list of primary dealerships, raising a familiar, weary groan from SSA bankers worried about the future of the model — but the head of a major eurozone sovereign has said that issuers are on the banks’ side.

Good news from the US Federal Reserve — in the form of a more dovish rate announcement than some market participants had expected — brought a sanguine close to a turbulent week for credit derivatives and boosted equity markets, but only added to the pressure on emerging market countries and their currencies.

UBS successfully completed a cash tender offer for Sfr6.1bn ($6.12bn) of its securities on Thursday, as the group looks to further strengthen its capital base.

Market participants expect a large step up in senior holdco issuance early next year, putting further pressure on spreads and pushing some issuers further afield for funding.

Italy could soon ban banks from selling subordinated debt to retail investors, heaping pressure on funding costs and potentially eliminating a large portion of the industry’s investor base. Tyler Davies reports.

The covered bond market is likely to see more supply in 2016 than it did in 2015 even as the European Central Bank reduces covered bond purchases in favour of other asset classes, said analysts this week.

The auction to settle credit default swaps referencing Abengoa will take place in January, after the Spanish renewable energy company last week triggered both failure to pay and bankruptcy credit events.

Investors appear to be confident that a Spanish general election this weekend will return a market-friendly result, with the sovereign enjoying much tighter spreads to its nearest comparable than earlier in the year — despite its yields rising at a debt auction this week.

Morgan Stanley has rehired Olga Basirov on to its senior relationship management team after she spent several years on the buyside.

Dentsply International, the US dental equipment maker, printed a dual tranche private placement Swiss franc note on Tuesday, as a part of its private placement funding programme.

SSA issuers are readying themselves for a busy 2016 after the Fed eased the markets into a higher rates environment on Thursday.