Europe

Covered bonds risk becoming less relevant in future if central banks continue to eclipse private investors as the banking system’s principal funding source, Moody’s warned. Nonetheless, delegates from a record number of countries registered for Euromoney ECBC Virtual Covered Bond Conference, which began on Wednesday.

Senior deals from BPCE and Erste Group Bank this week benefitted from enthusiastic investor support amid a shortage of supply in the asset class.

Pemberton, the direct lender and asset manager part owned by Legal & General, has appointed Robert Wartchow as a portfolio manager and managing director.

Equity capital markets investors had a chance to buy Russian risk again on Tuesday evening, as Otkritie Bank sold a Rb30.4bn ($400m) stake in gold miner Polymetal.

The European bond market has lost none of its charm or interest, said one of its most experienced bankers this week, on the verge of his retirement. Hugh Carter, Commerzbank’s head of credit syndicate, is leaving the bank on September 18.

Italian lender Credito Emiliano opened books on a new €200m tier two on Wednesday, as it looked to improve its financial position in a strong market for subordinated debt.

Nordic Semiconductor, the Norwegian maker of semiconductors, has completed an Nkr1.1bn ($125m) growth capital raising to fund M&A opportunities and an acceleration of its growth strategy.

The European Union is about to kick-start its huge borrowing programme for the Support to Mitigate Unemployment Risks in an Emergency (SURE) fund later this month. It is expected to bolt on additional financing needs for its recovery fund too, once that has been ratified. That could mean up to €100bn of new supply by the end of next year. Printing that as sustainability bonds will give that market the best fillip it could wish for. The EU must seize this opportunity given its commitment to the cause.

The Schuldschein market, which has spent the last few years growing increasingly international compared to its domestic origins in Germany, has lost its adventurous streak due to the coronavirus pandemic. Forays into unknown territories with borrowers from new industries are being treated with trepidation and lenders are heading back to what they know best.

As Caisse des Dépôts et Consignations (CDC) returned to the sustainability bond market on Tuesday to sell its second bond in the format, fellow French agency Caisse d’Amortissement de la Dette Sociale (Cades) mandated for its own sustainability bond debut.

All eyes were on Italy in the primary euro public sector bond market on Tuesday as it pipped Spain for the biggest ever order book for a eurozone sovereign syndicated bond in the 20 year part of the curve.

Equity investors should be nervous about US tech valuations as the fabled FAANG (named for Facebook, Amazon, Apple, Netflix and Google) stocks look extremely expensive after reaping in the cash during the equity rally that followed the initial Covid-19 sell-off. With valuations at near-preposterous levels and the macro-economic environment worsening with rising Covid-19 cases and a bitter election around the corner, market moves down last week could be a sign of worrying times ahead.