Europe

This week in Keeping Tabs: confronting dollar bears, Lebanon’s crisis, the power of debt in Ireland, and funding equity research.

Overcollateralisation (OC) levels have increased on covered bond pools since last year for European issuers, Fitch Ratings said this week. But while issuers in some countries, like the UK, showed a rise above the average, borrowers that have participated in central bank funding, like those in Germany, have managed to keep OC levels down.

A tumultuous week in Turkish currency markets ended with the lira hitting new lows against the dollar and the Central Bank of the Republic of Turkey finally taking action to try and calm volatility. Amid such swings, a sovereign bond issue looks unlikely.

Investors have been more than happy to buy into new additional tier ones (AT1s) this year, with a rise in spreads having minimised the risk that deals could be extended beyond their first call dates.

Akbank, one of Turkey’s largest financial institutions, has raised a green bond, the first of its kind from the country since the Covid-19 pandemic began.

BMW Finance, a subsidiary of German carmaker BMW, sealed a Rmb500m ($72m) three year dim sum bond on Thursday. It was the first publicly sold offshore renminbi trade by a corporation since November last year.

Financial authorities face a tough call on how and when to exit from the exceptional regulatory relief measures they put in place to shelter borrowers from the worst impacts of the Covid-19 pandemic, according to the Bank for International Settlements (BIS).

Trading platform Liquidnet is set to expand into the primary market through a new issuance system for European corporate and emerging markets bonds, one that would rival Ipreo’s Investor Access and other, newer entrants to the business. Liquidnet’s global head of fixed income, Constantinos Antoniades, discussed the plans with GlobalCapital.

The coronavirus crisis is a further reminder that fundamentals are not the only thing that matters when investing in bank capital.

Subordinated debt transactions in dollars from a trio of European banks left no doubts about the strength of the Yankee market this week. Bookrunners are encouraging issuers to execute trades in the asset class quickly, as they are unlikely to encounter better conditions before the end of this year, writes David Freitas.

European Union member states have begun applying for loans from the bloc’s €100bn Support to Mitigate Unemployment Risks in an Emergency (SURE) package. Unlike with other European rescue lending facilities, countries seem less concerned with the reputational damage of asking for a share of this cash, writes Lewis McLellan.

Turkey continued to teeter on the brink of a currency crisis this week, as the lira went on another rollercoaster ride and touched a record low.