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Crédit Mutuel follows with French fives as covered supply outlook questioned

Covered Bonds

Crédit Mutuel follows with French fives as covered supply outlook questioned

Crédit Mutuel Home Loan SFH followed Crédit Agricole SFH and BPCE on Thursday with a third French five year covered bond, which was priced at an identical spread. Even though the three issuers have raised almost €5bn between them, covered bond volumes are down this year and, with spreads at elevated levels, issuers will have more reason than ever to tap the European Central Bank for funding.

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  • Axa cites strong capital ratio after redeeming sub debt

    Axa cites strong capital ratio after redeeming sub debt

    Axa said this week that it would call one of its legacy tier two bonds as it reassured the market on the strength of its balance sheet during the coronavirus crisis. Most other insurance companies are not expected to face similar decisions until much later this year.

  • Crédit Mutuel follows with French fives as covered supply outlook questioned

    Crédit Mutuel follows with French fives as covered supply outlook questioned

    Crédit Mutuel Home Loan SFH followed Crédit Agricole SFH and BPCE on Thursday with a third French five year covered bond, which was priced at an identical spread. Even though the three issuers have raised almost €5bn between them, covered bond volumes are down this year and, with spreads at elevated levels, issuers will have more reason than ever to tap the European Central Bank for funding.

  • New Zealand bans dividends and T1 redemptions

    New Zealand bans dividends and T1 redemptions

    The Reserve Bank of New Zealand will prevent its financial institutions from redeeming subordinated bonds during the coronavirus pandemic, putting itself in contrast with other parts of the world, where banks remain free to manage their debt capital as they see fit.

  • SRB proposes to be ‘flexible’ on MREL, regulatory reporting

    SRB proposes to be ‘flexible’ on MREL, regulatory reporting

    The Single Resolution Board has said it will offer banks some flexibility around their regulatory reporting deadlines, easing the operational strain on the sector during the coronavirus pandemic. The supervisor may also ‘adapt’ transition periods and interim targets relating to the minimum requirements for own funds and eligible liabilities (MREL).



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Special Reports

  • Banks contemplate multiple futures ahead of MREL swell

    Senior Debt

    Banks contemplate multiple futures ahead of MREL swell

    European banks are about as close as they can be to having clarity on their minimum requirements for own funds and eligible liabilities (MREL). Now it’s up to them to figure out what impact the new bond standard will have on their funding plans, annual profits and business models. Tyler Davies reports

    13 Dec 2019
  • Green capital: a new  frontier for banks

    Regulatory Capital

    Green capital: a new frontier for banks

    Banks and insurance companies are finally straining to turn capital markets greener. With many having realised there are savings to be had in issuing green senior bonds, the idea of them embracing sustainable capital instruments seems to be just around the corner. David Freitas reports

    13 Dec 2019
  • Riveting year ahead for covered bonds in QE-warped market

    Covered Bonds

    Riveting year ahead for covered bonds in QE-warped market

    Covered bonds performed well in 2019, but yields finished in negative territory and spreads ended at their tightest for the year. The implication is that, despite higher than expected ECB covered bond purchases and a renewal of its ultra-cheap TLTRO facility, investors will struggle to match 2019’s returns in 2020, writes Bill Thornhill.

    13 Dec 2019
  • 2019 bond deals of the  year: financial institutions

    FIG

    2019 bond deals of the year: financial institutions

    Reflecting on 2019, market participants may be surprised to see how things panned out. They went into the year expecting to ride out the end of QE and instead got a new purchase programme, funding scheme and rate cuts from the European Central Bank. This backdrop has given banks and insurers another good opportunity to move towards meeting their regulatory debt requirements, while testing new lows for their costs of funding and capital. GlobalCapital wanted to reward the deals that achieved stand-out results for issuers, in terms of pricing, execution and timing. The winners are presented here.

    13 Dec 2019
  • The GlobalCapital debt capital markets survey: banks expect to make money and hire

    Sub-Sovereigns

    The GlobalCapital debt capital markets survey: banks expect to make money and hire

    Markets go into 2020 fretting about a global recession and an escalation of tradetensions between the US and China, according to 25 heads of debt capital markets in the EMEA market, in Toby Fildes’ annual outlook survey. Respondents are mildly pessimistic on spreads and fees in the primary markets as well. But on the plus side, bankers are feeling hopeful about sustainability-themed bonds and almost unanimously believe issuance will top $270bn.

    13 Dec 2019
  • Covered bonds grapple with QE-distorted world

    Covered Bonds

    Covered bonds grapple with QE-distorted world

    Navigating the covered bond market will not be without its challenges in 2020. The Targeted Longer Term Refinancing Operation (TLTRO), European Central Bank deposit tiering and the Covered Bond Purchase Programme have collectively distorted the market, but added to this concoction is the impact of negative interest rates. Against this backdrop issuers, investors and investment bankers gathered in Munich in November to discuss the outlook for covered bonds. It is likely that new issue premiums will gradually tighten, but the path is unlikely to be smooth. January is typically the busiest month, but in 2019, issuers that funded this early paid the highest spreads. And, with the ECB expected to buy in the region of €4.5bn covered bonds a month, issuers will not feel compelled to move early. But the ECB monetary policy has unwelcome implications. Covered bonds have begun to lose value against government bonds, and this will extend if the ECB is unable to loosen restrictions on government bond purchases.

    14 Jan 2020

In Depth

  • Banks redraw funding plans amid corona crisis

    The coronavirus crisis has made it difficult for banks to know how much wholesale funding they will need in the coming years. But when a window opened in the primary market this week, issuers showed that they are still focused on trying to build up their levels of total loss-absorbing capacity (TLAC), write Tyler Davies, David Freitas and Bill Thornhill.

Bookrunners of Global FIG

Rank Lead Manager Amount $bn No of issues Share %
1 34.97 132 7.42%
2 31.35 126 6.65%
3 29.25 118 6.21%
4 28.26 86 6.00%
5 27.57 141 5.85%

Bookrunners of Global Covered Bonds

Rank Lead Manager Amount $bn No of issues Share %
1 4.52 19 6.10%
2 4.42 23 5.96%
3 4.29 30 5.78%
4 4.11 18 5.54%
5 3.37 16 4.54%