Europe

European covered bond issuers are waiting for liquidity to normalise before printing new deals and will rely upon their access to emergency central bank liquidity lines instead, three funding officials told GlobalCapital. They are also contacting customers to better understand how their loan and deposit books are likely to change before deciding how their funding strategies should be revised.

The Financial Conduct Authority, the City regulator, has said it will not introduce a short selling ban, since there was no proof that short selling was responsible for the recent market falls.

The combined capital markets funding of German states in 2020 will substantially rise and could return to the levels seen at the height of the global financial and eurozone sovereign debt crises, according to a global head of debt origination.

The first two sovereign benchmarks since February are set to hit the market on Tuesday. Although volatility has not yet abated, bankers are eager for the deals to establish new price points for public sector issuers to start funding their responses to coronavirus.

The Free State of Bavaria enjoyed a strong reception from investors as it returned to the capital markets on Monday for the first time since 2014 to fund a Covid-19 fiscal package by the Bavarian government.

Radical intervention by central banks around the world to calm markets will help give companies the comfort they need to prepare emergency capital increases to combat the effects of the spread of the coronavirus on their balance sheets, according to equity capital markets bankers.

Institutional investors in the US private placement market are preparing for a round of covenant waivers, as companies brace for the economic impact of the coronavirus pandemic. Bankers in turn are shelving primary issuance plans and turning their attention to winning amendment mandates.

Equity market participants have welcomed the Financial Conduct Authority's call to UK companies to hold off on publishing preliminary financial statements.

The UK Debt Management Office will boost the size of its Gilt issuance programme for its upcoming financial year by up to an additional £45bn in response to the UK’s fiscal package to counter the economic impact of the Covid-19 pandemic, according to a head of UK rates strategy.

A rush to dollars in recent days has caused dysfunctions in various corners of the financial markets. The US Federal Reserve has rushed to put out the flames, including with new measures on Monday.

The hunt for liquidity has driven covered bond spreads wider across the board with little fundamental differentiation between assets, investors told GlobalCapital on Monday. This move has thrown up opportunities to find value before liquidity is restored when the European Central Bank steps up its asset purchases.

The pace of emerging markets borrowers’ requests for official institution funding, amid the shocking deterioration of their bond markets, is picking up pace. On Sunday, Ukraine's president Volodymyr Zelensky said that he had discussed using International Monetary Fund resources to fight the economic impact of Covid-19.