Europe

Public sector borrowers returned en masse to the primary bond market this week, with many selling new issues with an explicit focus on providing emergency financing in response to the coronavirus outbreak.

Dear reader, These are extraordinary times for global capital markets as the world reels from the spread of Covid-19.

The SSA market appears to be well and truly up and running, with four SSA borrowers hitting screens for new bonds in euros on Thursday, pulling in an impressive €11.5bn with deals from three to 30 years

Zur Rose, a Swiss online pharmacy group, revived the primary equity-linked bond market in Europe this week, issuing a debut Sfr175m five year convertible bond as demand for its services increases amid the Covid-19 crisis.

Pockets of stability in the Swedish market drove demand across the curve this week, allowing investors the chance to pick up a handful of well-known SSA names at highly attractive levels.

The European Central Bank announced on Wednesday night that it would be removing the self-imposed limits on its holdings of sovereign debt for its €750bn pandemic emergency purchase programme. The news drove an impressive reduction in the spread to Bunds on government bonds from the eurozone periphery.

The Schuldschein market’s official lines of bookbuilding have been all but shut during the Covid-19 crisis, but sources have told GlobalCapital that several companies have discreetly approached larger lenders for club or bilateral deals.

Spain led the way back into primary bond markets in no uncertain terms this week, raising a staggering €10bn of seven year cash and demonstrating that, in spite of the worst bear market in history, investors are still happy to buy at the right price. Pablo de Ramón-Laca Clausen, director-general of the Spanish treasury, talked to GlobalCapital about the experience.

The 2008 financial crisis forged a generation of investment bankers well versed in advising governments — and with many having returned to banking, they are likely to be in demand again. But history suggests banks will not be earning lucrative fees, writes David Rothnie.

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.