Europe

Lloyds Bank Corporate Markets seized the opportunity to raise senior funding in sterling on Tuesday, with the market back in 'extremely good shape' after several days of volatility. It is expected to be followed in the currency by Legal & General Group and Virgin Money, which have each announced strategic transactions this week.

The Republic of Belarus is taking a second run at the new issue market after its first round of marketing ran into Covid-19.

La Mondiale took advantage of a sudden improvement in market conditions this week to strengthen its capital structure with the sale of a new tier two. The French insurer was able to launch its deal 5bp through fair value.

The Single Resolution Board is asking for new data from banks on their key metrics as of the end of June, with an eye to using the information to tweak their minimum requirements for own funds and eligible liabilities for 2020.

AIB Group priced a €625m additional tier one (AT1) bond in euros this week, following several volatile days of trading for the asset class. The deal surpassed expectations in terms of size and pricing, having been run along with a tender offer for one of the Irish lender’s existing AT1s.

Kinnevik, the Swedish investment company, sold a 4.4% stake in German e-commerce company Zalando on Monday night with investors pouring into the trade after the US Federal Reserve boosted secondary markets.

Belgian materials technology and recycling company Umicore has tapped into growing investor demand for issuers with strong ESG credentials by placing a debut €500m convertible bonds to fund its development and diversify its funding structure.

Crédit Agricole has mandated seven banks for its second outing in China's onshore renminbi market. The deal, again taking the form of a senior preferred bond, is expected to price next week.

The corporate sector was not at the centre of the 2008-9 financial crisis — banks were. This time, it is companies of all kinds that are first in the financial markets to feel the stress of the coronavirus pandemic. Measures to control the infection have stopped many businesses’ revenues, completely and suddenly, and put others under severe strain. In such a situation, the quality of a company’s financial planning and management are revealed. Tested just as much are the financial networks that surround a company: its banking relationships and ability to finance itself in a variety of markets.

Just as it did in and after 2008-2009, the financing burden of responding to 2020’s crisis has fallen squarely on the shoulders of governments. But there are essential differences between the crises, not least the speed and scale with which sovereign issuers have had to jump into the bond markets. In the UK, within six weeks, a full year’s public borrowing requirement of £156bn had multiplied into a four months’ requirement of £225bn. To put that into context, the UK Gilt market’s previous busiest year was 2009-2010, during which it raised £227.6bn.

J. Christopher Flowers, the eminent private equity investor, sees a lot of potential for new deals in European finance in the aftermath of the coronavirus pandemic.

Dr Jörg Kukies, State Secretary for Financial Market Policy and European Policy at the German Federal Ministry of Finance, speaks to GlobalCapital’s Managing Editor, Toby Fildes, on Covid-19, European policy and Germany’s financial markets.