Europe

The European Central Bank said this week that Covid-19 could hamper some banks from meeting their targets for the minimum requirements for own funds and eligible liabilities (MREL), given the likelihood of credit rating downgrades and dislocation in the funding markets.

Investors welcomed a €781m trade in Italian payments firm Nexi on Tuesday evening after three of the sellers from the firm’s IPO took advantage of a recent rally in the share price to cut some of their stake.

The stream of French covered bond deals was interrupted on Wednesday when KBC Bank returned to the market for the first time in more than two years to issue a long five year, priced slightly inside its own curve. The oversubscribed order book, reflected investor anxiety about the supply drought.

Equities and investment-grade bonds are overpriced in developed markets, according to Tommy Garvey, member of the asset allocation team at GMO. The US-based investment firm has just slashed its exposure to developed equity markets.

Aviva was set to raise £500m of tier two capital on Wednesday, fuelling speculation that the UK insurer would be looking to call one of its outstanding perpetual bonds.

Infineon, the German manufacturer of semiconductors, has completed a €1bn capital raise to partially refinance its acquisition of Cypress Semiconductor Corporation. The deal demonstrated investor willingness to put capital to work in strategic equity raises that look beyond funding needs of the coronavirus crisis.

European emerging market names have bulked up deal flow during the Covid-19 crisis and The Republic of North Macedonia continued that trend on Wednesday with a six year euro benchmark deal.

BBVA on Wednesday became the first European financial institution to launch a bond in the euro market to tackle Covid-19, unravelling the appetite for these type of bonds while undergoing a refinancing exercise.

RAG Stiftung has sold half of its stake in Stadler Rail, the train manufacturing company that floated on the SIX Swiss Exchange last year.

Mediobanca frontloaded regulatory issuance and completed its funding plan before the coronavirus crisis struck. While its corporate loan book has increased, deposit inflows have also improved which means the bank is in no hurry to return to the public market according to head of group treasury, Carlo Masini, and head of funding, Paolo Labbozzetta.

Alex Neumann has been named head of markets and securities services for Switzerland and Liechtenstein, the latest in a series of appointment at Citi’s markets franchise.

Michael Sansen, a trader specialising in public sector and covered bonds, has joined Citi after spending his entire career at ING.