Europe

Every time a UK company gets into trouble, the call goes up for a state rescue — calls which the government, sensibly, usually rejects. With the increasingly troubled Intu, however, it might not be the worst idea.

Market participants are calling on European financial authorities to help banks deal with the impact of Covid-19. Forbearance could come in the shape of state guarantees or in the form of the relaxation of certain elements of bank capital requirements.

Italy’s capital markets bankers are keeping calm amid the coronavirus crisis, getting used to working from home, and trying to support clients as well as they can, while wishing for help from Europe and the European Central Bank. But they are not allowing themselves to hope the worst is over. The health crisis is acute and getting worse.

Italy’s equity capital markets bankers have not thrown in the towel on 2020, despite much of the country effectively being shut down by the spread of the Covid-19 coronavirus.

The UK Debt Management Office hit the market for an auction of a 10 year line on Tuesday, testing the waters at new yield levels and finding demand. However, the short-dated paper scheduled for next week could prove more challenging.

Europe’s convertible bond market is positioned to benefit from spiking volatility in equity markets due to the convexity of the asset class, which could lead to an increase in primary issuance in the future.

Market analysts reacted positively this week to the Spanish Treasury’s Cédulas consultation, but the thorny question of how the market will transition to the new regime has potentially negative implications.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, March 9. The source for secondary trading levels is ICE Data Services.

A window for Kangaroo issuance opened this week, as a positive move in the Australian dollar/euro basis swap helped rouse a slumbering market that had not seen a deal for a fortnight. In spite of unstable conditions, SSAs entered the market on Monday and Tuesday, with a trio of regular borrowers tapping six lines for a combined A$575m ($364m).

A brutal sell-off in credit in recent trading sessions has left some market participants questioning whether bank bonds are now ‘more in tune with what they should be’.

Banks have started splitting up trading teams across locations, while many of those working in the capital markets have been stuck at home. This has caused a couple of hiccups and worries but some wonder if it will lead to a shift in attitudes about meetings and work flexibility once coronavirus passes.

Europe’s equity capital markets bankers are postponing new stock market listings until after Easter at least, given the severe logistical challenges posed by efforts to contain the Covid-19 coronavirus and heightened equity market volatility.