Europe

Unédic, the French unemployment agency, will have a substantially bigger funding programme for 2020 in response to the coronavirus pandemic, according to its chief financial officer, Jun Dumolard.

European corporates facing months of operational lockdown in the face of the coronavirus pandemic are turning to equity capital markets to secure their survival. But they need to be quick about it with markets so volatile, meaning banks are exploring how to get them in and out of the market without putting them through the long, arduous process of a rights issue.

Hesitant covered bond issuers, that had been waiting for the European Central Bank to commence buying under its Pandemic Emergency Purchase Programme (Pepp), may no longer have an excuse to wait and should return to the market soon — particularly since funding levels are cheap relative to senior unsecured, but also because wider spreads may reflect the deterioration in credit risk as opposed to liquidity risk.

The volume of new euro senior debt sold by banks has hit €10bn this week, following deals from Barclays, Credit Suisse and NatWest Markets on Thursday. Yield and spread levels remain high, but market participants have been delighted to see investors throwing their confidence behind new transactions in the middle of the coronavirus crisis.

UK chemicals firm Johnson Matthey is looking for a target of $300m US private placement funding, with arrangers more confident of selling dollar debt than euro or sterling flavours.

European issuers have got their wish thanks to deals from European Investment Bank at three years and a five year from KfW on Wednesday.

The Republic of Austria and the African Development Bank announced new bond transactions on Wednesday which will be used to provide emergency financing in response to the coronavirus outbreak.

Banks took advantage of a huge rally in UK equities on Tuesday to launch a placing in SSP, a UK food outlet operator, in order to give it the cash required to strengthen its balance sheet, working capital and liquidity position because of disruption caused by Covid-19.

The Republic of Slovenia navigated a much changed euro new issue market on Tuesday, executing a three year bond and tap that required unconventional pricing tactics.

New senior bank bonds are proving attractive to investors at about 40bp-50bp or more over secondary levels, with UK issuers Lloyds and HSBC joining US peers in returning to the new issue market this week.

Bank of Nova Scotia issued its first dollar covered bond benchmark since 2016 on Wednesday. The deal follows a series of retained Canadian dollar covered bonds that were pledged to the Bank of Canada after it recently broadened repo eligibility to include the asset class.

The Eurogroup made no progress towards creating a common EU debt instrument on Tuesday night, but member states will be able to fund their responses to the coronavirus crisis through a new credit line with the European Stability Mechanism.