Europe

The private placement market has provided a valuable source of funding in both covered bond and senior unsecured format, German issuers told GlobalCapital on Monday in the wake of a Moody’s report that highlighted the limited use of Pfandbrief for funding commercial lending.

BNP Paribas and Crédit Agricole have become the first euro area banks to launch senior bonds for nearly two months. They joined UBS in the euro market on Tuesday, taking advantage of a recent rally in credit spreads across the sector.

Europe’s equity-linked bankers expect to remain active in the months ahead as more and more companies turn to convertible bonds to raise financing during the Covid-19 pandemic.

A large positive move in stock prices in the past three weeks has buoyed many market commentators, but equities bankers and investors are concerned that equity valuations still do not reflect the severity of the economic effects of the Covid-19 pandemic. If first quarter results or a worsening of the virus are bad enough to drive markets lower still, sufficient harm could be done to investor sentiment to slam shut a vital issuance window for companies desperate to raise cash.

Hedge funds are showing up in greater numbers in order books for agency bonds, attracted by the strong performance and elevated spreads available in the SSA asset class.

BMO Capital Markets lead managed its first ever sterling public sector bond issue this week, with an under the radar tap for Rentenbank.

Rating: Aaa/AAA

German agency L-Bank steamed into the dim sum bond market on Tuesday to print what could be the start of a new flurry of offshore renminbi issuance.

Vesuvius, the UK listed ceramics engineer, is marketing a US private placement, according to market sources.

This week's funding scorecard looks at the progress of Europe's supranationals and agencies in early April.

Gilt market participants are expecting UK government borrowing to explode to close to £300bn this year. However, despite the huge supply, the Bank of England’s buying programme will prove even bigger and maintain price tension. To further ease the strain on cashflows, the Bank of England is expanding its Ways and Means Facility for the short-term.

Supermarket Income Reit, the UK real estate investment trust focused on supermarkets, has unveiled a £75m fundraising to finance new investment opportunities that may arise from the Covid-19 crisis, which had caused UK grocers to be inundated with demand.