Europe

A new tier two deal from Italian lender Monte dei Paschi di Siena on Thursday showed that the market is open for trickier credits looking to sell riskier bonds. The deal emerged as the European Central Bank told Monte to raise capital to complete the sale of €8bn of non-performing exposures to Amco, the state-owned asset management company.

Greencoat UK Wind’s £350m ($467m) debt funded acquisition of a stake in two wind farms from SSE has pushed the infrastructure fund close to its leverage cap, with the fund already planning a new round of equity raises to pay down the debt.

Siemens Healthineers, the German healthcare tech company, has sold €2.73bn of new stock in the largest block trade 2020 has seen so far to partly finance its $16.4bn acquisition of US cancer care solutions firm Varian. The consensus among ECM bankers is that it will be vital to execute transactions during the next few weeks, before a tempestuous US election and possible rises in Covid-19 cases spoil the party, write Sam Kerr and Aidan Gregory.

The top investment banks will achieve substantially higher returns on equity this year, predicts analytics firm Coalition, after revenues in fixed income, currencies and commodities (FICC) soared in the first half of the year.

The covered bond market appeared well supported this week with the success of new deals suggesting scope for spreads to tighten further, especially Asian bonds. However, the long end of the curve could prove vulnerable as SSA supply ramps up, especially from the EU, which will be funding its coronavirus rescue package in the bond market, according to a covered bond trader with a good share of the market.

Luxembourg became the first European sovereign to publish a sustainability bond framework this week, breaking the pattern, to which Germany became a notable addition on Wednesday, of governments printing green deals. But sustainability bonds make much more sense for countries large and small.

Merck, the US pharmaceutical company, launched a chunky €1bn hybrid on Wednesday, as syndicate bankers said they expect even more subordinated corporate debt despite the flurry since returning from the summer break.

The Hellenic Republic returned to the market this week to tap a June 2030 line, raising €2.5bn with its third syndication of the year.

The Grand Duchy of Luxembourg has become the first European country to publish a sustainability bond framework and has mandated banks to prepare a debut deal in the format.

Banco de Sabadell on Wednesday looked to replicate the success of Mediobanca earlier this week in capitalising on appetite for green bonds. Appetite for the Spanish lender’s inaugural green preferred senior bond led it to print the deal through fair value.

The European Stability Mechanism hit dollar the market on Wednesday with a five year benchmark — its fourth ever in the currency. Two Nordic issuers are set to follow suit on Thursday.

Virgin Money UK tested the strength of the sterling market this week by looking to raise tier two debt. The UK lender was able to tighten pricing by 50bp and print inside fair value, and the new trade accompanied a tender offer of the issuer’s old securities.