Europe

UBS Group opened books on new additional tier one (AT1) on Wednesday, as it looked to hoover up demand from yield-starved investors in the Reg S dollar market.

Credit analysts hope that European banks will be able to report much stronger capital levels in the second quarter, amid early signs that risk-weighted asset (RWA) volumes could be lower than expected.

HICL Infrastructure, the UK-based infrastructure equity investor, completed a £120m ($153m) capital raise on Tuesday to repay £75m of debt and to fund an acquisition in Ireland.

The euro SSA market has grown used to investors flush with cash, itching to buy anything that comes on screens with a good enough rating. But with the EU preparing to issue more than €850bn over the next few years, the balance will shift against issuers, and they must be prepared.

Moody’s has proposed changes to its covered bond rating methodology, with an update to the framework for valuing commercial real estate (CRE) properties, and on Tuesday it published a request for comment. A small number of programmes are likely to be downgraded by one notch as a result of the proposals.

Investors have got a fever, and the only cure is more pharma. Biotech equity issuance is surging, in line with rising stock prices in the secondary market, as stock pickers pan for the company that will cure Covid-19, among other maladies. But this is more speculating than investing and many are going to catch a cold chasing around a risky sector that is starting to look a lot like the dot-com bubble.

KfW made a strong return to the benchmark green bond market on Tuesday, taking advantage of a more attractive pricing dynamic for green bonds over conventional issuance compared to earlier in the year.

While bankers in the Northern hemisphere plan well-deserved summer breaks, the Australian and New Zealand dollar markets are set to remain open for business, with some competitive pricing on offer.

Russian steel producer Novolipetsk Steel (NLMK) has raised a €600m syndicated loan, as experts say that the continued presence of Russians in the market during the crisis is down to the resilience they were forced to acquire after years of sanctions.

EU leaders ended a marathon 91 hour summit early on Tuesday morning, having agreed a new €1.82tr budget for the bloc, including a much anticipated — and highly contentious — €750bn recovery fund to help member states fight the Covid-19 pandemic. Despite the fierce and protracted debate, market reaction to the news has been muted.

The German covered bond market is famed for its stability but S&P has drawn attention to the diversity of its borrowers' cover pools, suggesting that their performance will begin to differ. One major investor said he favours bonds secured on residential loans, rather than commercial ones, as a result of prevailing economic conditions.

Raiffeisen Bank International is getting ready to sell its third additional tier one (AT1) instrument, as it looks to make full use of its regulatory allowance for subordinated debt capital.