Europe

EMEA equity capital markets have reopened in dramatic style as companies rush to raise emergency funds at a time of maximum uncertainty because of the Covid-19 pandemic. Companies are being urged to act quickly in case market confidence evaporates again as the deadly disease continues to spread, write Sam Kerr and Aidan Gregory.

Agence Française de Développement raised €1.5bn on Wednesday with a 10 year Reg S benchmark. While the deal was fully subscribed, pricing was not tightened from guidance, indicating that the frothy moves of the last three weeks may be slowing.

The UK Debt Management Office (DMO) and local councils should sell social bonds to help tackle the Covid-19 crisis, said a director for responsible investment at a large asset manager.

Some fear a sorry fate for European private debt funds, as small and medium-sized businesses across the continent struggle to stay afloat amid the devastation caused by Covid-19. Symon Drake-Brockman, founder and managing partner of Pemberton Capital Advisers, one such private debt fund, spoke to GlobalCapital’s Silas Brown about the pandemic and the prospects for private credit in its wake.

Market participants are expecting a gigantic take-up in the next round of the European Central Bank's Targeted Longer-Term Refinancing Operations (TLTRO III), after the central bank said that it would accept a much broader range of assets as collateral in the scheme. Smaller banks are likely to be among the biggest winners, with the new criteria helping them to look after their liquidity coverage ratios.

Shares in UK online fashion retailer Asos rose by more than 30% on Wednesday after the company completed a £247m ($339.46m) share sale to shore up its balance sheet during the Covid-19 crisis. The rise reflects investor confidence that the fashion retailer will endure disruption from the pandemic causing a sharp drop in demand for fashionable clothes.

Rating: Aa2/AA-/AA

The European Central Bank’s clarification of how it buys covered bonds from investors changes nothing, said a leading covered bond asset manager on Wednesday. It would be more effective if the ECB were to offer, like Sweden's Riksbank, more disclosure on the bonds it was interested in buying, he said.

European banks are struggling to decide how to strike the right tone when reporting their first quarter results this year amid the extreme uncertainty surrounding the coronavirus pandemic. Despite guidance from regulators, their biggest difficulty will be in signalling their expectations for loan losses.

Financial institutions bond bankers are struggling to build a new pipeline of issuance, despite a significant improvement in market conditions this week. Not only are banks entering blackout periods ahead of first quarter results, many of them are also happy to wait before seeking to raise new funding.

Finance ministers have agreed on the use of the European Stability Mechanism, the European Investment Bank and a new unemployment fund as a fiscal response to the coronavirus crisis, but they remain split on language about a possible common recovery fund. They are set to reconvene — virtually — on Thursday afternoon.

'We are all in this together' is not a view Europe’s investment banks will recognise when they compare themselves with their formidable US rivals, writes David Rothnie.