Europe

This week in Keeping Tabs: what’s next after the EU recovery deal, assuaging public anger, and the Lebanese economy.

Vodafone has planted its flag to lead the 2021 IPO calendar, with the listing of its European towers unit in Frankfurt.

Tight trading levels will make covered bonds an attractive asset class for statement trades and issuers outside of the euro area, but market participants say that this is unlikely to be enough to lift overall supply volumes out of the doldrums in the second half of 2020.

The European Banking Authority has told supervisors that they should remain ‘pragmatic and flexible’ when carrying out the supervisory review and evaluation process (SREP) for banks this year, confirming that Pillar 2 requirements could remain stable across the industry despite the risks posed by Covid-19.

Two former bond bankers at Citi have set up a workflow and analytics platform to help improve the efficiency of debt capital markets desks at investment banks.

Wordline, the French payments company, has returned to the equity-linked market to sell a new five-year €600m convertible bond at a negative yield.

EMEA’s equity capital markets were buzzing on Friday morning after Goldman Sachs placed a 13.2m block of shares in Cellnex, the Spanish telecoms tower company, which allowed the company’s largest shareholder to monetise rights that it intends not to exercise in the issuer's forthcoming €4bn rights issue.

In this round-up, the already fraught relationship between the US and China faces fresh tests, as both countries continue announcing retaliatory measures against each other.

Surging redemptions and aggressive buying by the ECB — which is also offering issuers a cheaper funding alternative — mean a reduced supply outlook for the covered bond market and, therefore, ever tighter spreads. But higher yielding, safer alternative investments are on the horizon, meaning the asset class may soon lose its allure.

Coventry Building Society (CBS) is racing to price Economic Master Issuer 2020–1, with the help of arrangers HSBC and Lloyds, to meet the huge demand for the deal, which is a hybrid between a master trust structure and a standalone RMBS — the first of its kind. The transaction, set to herald the next step in master issuer structures, is an innovation which could open the door to more financial institutions committing to long-term RMBS programmes, writes Tom Brown.

A burst of additional tier one (AT1) supply this week showed that financial institutions will be keen to take advantage of every funding window available this summer, despite having made substantial progress on their annual issuance plans.

EU leaders spent 91 of the 120 hours available at their Special European Council, which concluded on Tuesday, thrashing out the bloc’s new €1.82tr budget — including the €750bn recovery fund — dubbed Next Generation EU. The decision spells dramatic changes not just for the eurozone but for its bond markets, writes Lewis McLellan.