Europe

Core covered bond markets still have scope to perform by a few basis points over the rest of this year, said bankers on Tuesday. They argued concerns about the EU recovery fund pushing spreads wider had been overplayed.

UK housing provider Settle Group has raised £75m of private placements to institutional investors. For many investors, the housing sector is one of the few that has continued to provide opportunities throughout the crisis.

The State of Baden-Wuerttemberg only managed to sell around half of its €1bn 10 year bond to investors on Tuesday as it came flat or slightly through its curve alongside competing supply in the tenor.

Intesa Sanpaolo racked up plenty of orders behind an additional tier one (AT1) on Tuesday, showing that investors are hungry for new sources of yield. The deal ended a long pause for sales of subordinated debt in the euro market.

The European Investment Bank re-opened the primary euro public sector bond market with a decent outing in the 10 year part of the curve on Tuesday. Finland is next up, hitting screens for a deal of the same tenor expected on Wednesday.

Doubts about the strength of covered bond investor demand were swept away on Tuesday after Berlin Hyp issued its most oversubscribed Pfandbrief in more than five years. The deal sends a strong signal to other issuers that may have been considering tapping the long end at negative yields.

The European Commission has published proposals for allocating €87.3bn of its €100bn unemployment support programme SURE, the temporary Support to mitigate Unemployment Risks in an Emergency facility. Italy and Spain are set to receive the largest amounts.

Agence Française de Développement is hoping to publish a broader thematic bond framework in the next couple of months to include the issuance of social-labelled debt alongside green bonds.

This month has been the busiest August ever for equity capital markets issuance in EMEA, as dealmaking has powered on through the traditional lull. Market sources expect a very busy September, too.

Vodafone, the UK telecoms company, blasted the cobwebs off Europe’s corporate bond market on Monday with the first benchmark issue in August, launching a dual tranche hybrid capital issue that garnered €7bn of demand at guidance and was priced flat to its curve, as investors snapped up higher yielding paper.

The European Investment Bank will re-open the euro public sector bond new issue market for the last funding period of the year. Further issuers are expected to appear this week, trying to get in before the European Union’s giant borrowing programme begins.

Investors are doubtful whether the extraordinary stock market rally of the last few months will continue, as they await news of a vaccine, further economic fallout from the pandemic, and the result of the US presidential election. If they want to maintain equity exposure while limiting potential losses, UBS analysts have suggested using call options for certain indices.