Europe

Russia bonds burst back to the top of the emerging market priority list without a sanction being lifted after Alfa Bank smashed through its own yield curve on Wednesday. Demand is rampant among supply-starved investors who will be gleeful about the thawing of the geopolitical frost between Russia and the west, writes Francesca Young.

Public sector issuance could grow next year as Europe faces the double cost of strengthening security against terrorism and re-homing people fleeing war in the Middle East, adding to existing supply pressures, bankers have warned.

Demand was so strong for an agency bond tap on Thursday that the leads had to ask the issuer to increase the deal, as SSA investors scrambled to get their hands on one of the last large issues of the year.

Réseau de Transport d’Electricité issued a benchmark 10 year bond on Thursday that grew to €1bn, as a French-driven order book for the bond hit €3.5bn.

Last week we highlighted the positive performance of the mining sector with the Euromoney Global Mining Index returning +8.55% in October. Certainly not a bad start to the fourth quarter. Platinum producer Lonmin, who has been in the Euromoney Global Mining Index since 1985, topped the companies’ performance league table. That could be a bit misleading.

A 12 month roller coaster ride for US rates expectations has ended with the 10 year Treasury yield back where it started, and in the meantime the CEEMEA bond market has been turned on its head for completely unrelated reasons.

The European Central Bank has given its strongest hint yet that it could introduce more monetary easing in December, as eurozone periphery issuers enjoyed falling yields and strong demand.

Spain auctioned three year debt at a record low yield on Thursday, but its borrowing costs may have further to fall after the European Central Bank gave a strong hint that it could introduce more monetary easing.

Alfa Bank’s print of $500m 5% 2018s on Wednesday, which smashed 25bp through its own curve, demonstrated how big investor demand for Russian credit has become as the geopolitical frost begins to thaw.

UK building materials producer Breedon is eyeing a move to main market of the London Stock Exchange after its £336m acquisition of competitor Hope Construction Materials.

Allied Irish Banks was in a generous mood on Thursday, launching its first tier two since the crisis at a much higher premium than rival bankers thought necessary.

Monte dei Paschi di Siena (MPS) issued a €1bn 10 year Obbligazioni Bancarie Garantite on a comfortably oversubscribed book on Thursday, paying investors a rare triple digit spread, a coupon of over 2% and a 65bp spread over BTPs. With the European Central Bank expected to cut the deposit rate in December, carry trades are once again back in vogue.