Europe

As environmental, social and governance linked issuance increasingly take centre stage in the capital markets, the way investment banks are marshalling their resources in this area is undergoing a big shift, with the creation of new, distinct teams increasingly populated by professionals who do not have traditional banking backgrounds.

The European Union stunned onlookers this week with its first deal under its Next Generation EU programme, raising a record-shattering €20bn in a single tranche. Lewis McLellan reports.

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The Republic of Turkey demonstrated its access to international markets this week with a four times oversubscribed sukuk. But the deal does not represent an access-all-areas pass to the capital markets for the borrower, following a turbulent period that has seen little change to appease investors, writes Mariam Meskin.

The sterling covered bond market exploded into life this week as three transactions worth more than £3bn priced in three days, increasing this year’s issuance by 150%, and boosting hopes that more deals will follow.

A reverse enquiry from an institutional investor drove Raiffeisen to reopen its Swiss franc additional tier one (AT1) note this week, which was bumped up even further by demand from retail buyers.

Tuesday's 10 year benchmark new issue from the EU may have widened in the secondary market on Wednesday and Thursday but with the ECB able to buy the deal from Friday onwards, spreads look well supported, said traders on Thursday.

Labelled FIG issuance has doubled as a proportion of overall euro supply this month, with banks proving comfortable issuing ESG deals up and down the capital structure. In many recent cases, issuers have benefitted from extra leverage on pricing when they have used green labels for their transactions.

A growing number of issuers are turning to exchangeable bonds to raise financing during the pandemic, with this week seeing a series of deals, including one from the Spanish banking foundation Criteria Caixa. Equity-linked bankers expect this issuance wave to continue as more clients seek to get in on the act. Aidan Gregory reports.

Korean Housing Finance Corporation mandated leads for a euro covered bond on Thursday, to be issued under its social framework. At the same time, after this week’s trio of sterling covered bonds bankers believe there is scope for further Sonia-linked supply.

Wise, the UK financial technology company, is looking to make stock market history by becoming the first such firm to list on the London Stock Exchange through a direct listing. If the deal is a success, it will show other issuers a way to go public that avoids having to build an order book for an IPO in a difficult market.