Europe

All eyes in the public sector bond market are on the European Union as it prepares to bring its second Next Generation EU bond to the market next week, just a fortnight removed from its debut transaction under the NGEU programme. Lewis McLellan and Burhan Khadbai report.

Guarantor: Federal Republic of Germany

Rating: Baa1/A/A-

While the Schuldschein market has embraced ESG-linked financing, participants fear a lack of transparency around key performance indicators is an opportunity for greenwashing. The launch of a sustainability-linked deal Zeppelin, which traces its roots to the fabled aviation name, has heightened fears around market practices.

Gazprom ended a three year absence from the Swiss franc market this week by attracting a large amount of retail participation in a Sfr600m ($653.4m) deal that launched at an attractive spread.

Rates markets have been well supported in the last few days, but covered bond spreads are still a little shaky with market makers waiting to see the outcome of the next deal from the EU for its €800bn Next Gen programme that is expected to emerge on Monday.

The Republic of Slovenia debuted in the sustainable bond market this week when it sold its third debt offering of the year. It is only a matter of time, bankers said, before sovereigns across central and eastern Europe embrace the ESG debt markets.

Spain raised €8bn this week with its fourth syndication of the year, demonstrating that in spite of the Next Generation EU’s €20bn debut last week, the euro market still has plenty of depth. Concerns about hedge funds placing enormous orders are starting to recede, said bankers on the deal.

Market participants are considering whether sustainability-linked bank bonds have a future after the European Banking Authority expressed doubt over the format’s regulatory eligibility this week. The debate remains open, but some ESG bankers predict the focus for innovation could now switch to ‘use of proceeds’ products.

More emerging market issuers will issue convertible bonds following landmark deals in Turkey and the United Arab Emirates in recent weeks. The asset class is seen as a way for EM companies to raise capital while avoiding rising interest rates and to showcase the increasing sophistication of their home exchanges. Aidan Gregory reports.

Barclays has poached a leading real estate investment banker from JP Morgan in a move rivals say could lead to shift in banking relationships.

Italy brought a rare format to market on Thursday, selling its first syndicated CCTeu floating rate note in over a decade to extend its curve in this format of issuance.