Europe

Fintech was one of the hottest sectors in equity capital markets in 2019 and it seems to have lost none on its appeal during the coronavirus pandemic, as two deals on Tuesday demonstrated.

Subordinated bond issuance could decline dramatically among Nordic banks following implementation the EU’s new bank recovery and resolution directive (BRRD 2), Fitch said this week.

BE Semiconductor, the Dutch semiconductor maker, has followed its peer STM Microtronics into the equity-linked market this week by selling a €150m seven year convertible bond.

A prospective improvement in the European Central Bank’s deposit tiering facility mitigating the punitive impact of negative rates should be bad for covered bonds, 95% of which are negative-yielding. However, the unprecedented scale of reserves held on deposit with the central bank implies that many key investors will still be looking for anything that pays more than its deposit rate of minus 0.5%.

When the European Central Bank (ECB) is suggesting the additional tier-one market could cost the euro area up to 0.25% of GDP growth in the next year and a half, it is probably time to start thinking about reforming the asset class.

The European Stability Mechanism stands ready to lend eurozone countries up to 2% of their GDP at negative rates — but in spite of the clear cost savings compared to market funding, countries have yet to take up the offer. It is time to rid ESM lending of its stigma.

The UK government looks ever more likely to create a new public sector bank focused on green infrastructure. Policy experts welcome the prospect, but there would be many choices to make over the structure and financing of the organisation.

Despite the success of many emerging market sovereigns in issuing bonds in international markets this year, Turkey, typically a leading issuer, has been notable by its absence. And with its foreign exchange reserves running lower, the risks of it not being able to come to market at all could be mounting.

KfW tapped an October 2034 line on Tuesday, enjoying impressive demand for the €1bn trade thanks, in part, to the strong performance of the Bund curve sending investors hunting for yield.

Frankfurt Trade Fair, the events organiser and world’s largest trade fair, is looking to issue Schuldscheine, according to market sources, for the first time in its 800 year history. The events industry has suffered through the pandemic, as organisers have had to postpone or cancel conferences, or reproduce them digitally, as a result of lockdowns.

STMicroelectronics, the French-Italian semiconductor maker, has raised $1.5bn through the sale of new convertible bonds, the company said on Tuesday.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, July 27. The source for secondary trading levels is ICE Data Services.