Europe
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Rabobank exercised a call option on one of its outstanding additional tier ones this week, with market participants expecting redemption to become the rule rather than the exception during the coronavirus crisis. -
Caffil’s debut Covid-19 bond issued this week has shown that the moribund public sector covered bond market can play a crucial role in financing the response to the coronavirus crisis. The deal implies that the hitherto dormant public sector programmes many issuers have set up across Europe have scope to be reactivated to provide stable long-term financing for debt-ridden regional borrowers.
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As European countries prepare to ease lockdown measures, those in capital markets are well aware that their day-to-day lives will not go back to how they were anytime soon. They have mixed views on working from home, but will an entirely new working culture emerge?
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The European Central Bank (ECB) gave lenders even more of an incentive to use its Targeted Longer-Term Refinancing Operations (TLTRO) this week, dropping the potential rate of funding down to minus 1%. But the unveiling of a new unconditional lending scheme set tongues wagging, with market participants debating which banks might use the money and what they might put it towards, writes Tyler Davies.
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Caffil this week issued the first Covid-19 covered bond, securing vital funding for French hospitals to fight the pandemic. The deal emerged just as public sector borrowers, such as the German Laender, face mounting funding needs to cope with the pandemic, sparking debate over whether the hitherto moribund public sector Pfandbrief market could provide a vital source of cash, writes Bill Thornhill.
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The European Central Bank’s press conference on Thursday did not provide the headline fireworks that its last meeting did. The sombre tone caused “disappointment” among investors and a slight widening of peripheral spreads. SSA issuers were also left dissatisfied with the bank’s lack of support for the money markets.
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Open access, the much fought over and delayed section of the second Markets in Financial Instruments Directive (MiFID II), is facing further pushback, according to a European Council document seen by GlobalCapital.
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Banco Santander and Rabobank led senior bond supply in Europe this week, both issuing well-received non-preferred deals while Crédit Mutuel Arkéa went for the preferred format. National champions and other strong banks are lining up to issue while market conditions are conducive for deals, but lesser credits remain on the sidelines.
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Funding needs of regions across Europe are expected to rise this year as borrowers fund responses to the coronavirus pandemic. Spanish and German regions in particular will face heavier borrowing requirements.
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