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Banco BPM hit the euro market on Thursday with its first additional tier one (AT1), becoming only the third Italian bank to sell a deal in the asset class following national champions Intesa Sanpaolo and UniCredit. -
Yorkshire Building Society on Wednesday went to market with an inaugural sterling six year non-call five non-preferred deal after it said it would tender for its 2024 non-call 2019 tier two notes, opening a case for smaller institutions to decrease capital costs by replacing tier twos with senior non-preferred notes.
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The newly published Covered Bond Directive is viewed favourably by credit rating agencies, but it will not necessarily drive covered bond rating upgrades— in stark contrast to the Bank Recovery and Resolution Directive.
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Yorkshire Building Society is looking to buy back a series of tier twos before their first call date, after Coventry Building Society showed last month that the UK regulator was more relaxed than expected around what firms can do with their capital. But rather than replacing the bonds with an instrument of equal standing, Yorkshire is going one step further than its peer and proposing to issue its first non-preferred senior notes.
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ABN Amro issued its fourth green bond on Monday, pushing its maturity curve out to 2026 in senior debt. The deal was subscribed more than three times over its size of €750m.
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Smaller financial institution issuers have been welcomed back to the European bond market in recent weeks, after their hopes of raising deeply subordinated capital were dashed by turbulent market conditions in late 2018. But they are not taking chances this time, seeking comfort in using the support of just one investment bank rather than a group of bookrunners.
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Barclays’ corporate and investment bank has reached the endgame in its fight to boost returns following the departure of Tim Throsby, as group CEO Jes Staley takes control for the second time in three years.
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Crédit Mutuel Arkéa sold a seven year non-preferred senior note on Thursday, in a market where investors are thirsty for supply. The €500m deal attracted €2bn of orders — demand that even surprised the arrangers, given that funds are still ignoring growing risks around a no-deal Brexit.
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Citi and KBC Group led the way on Wednesday in what was a very busy day for new bond supply from financial institutions, with issuers taking advantage of stellar market conditions to raise funding ahead of reporting their first quarter earnings.
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The final text of the covered bond directive strikes a balance that provides the flexibility to introduce new assets while defending the product’s credit quality and avoiding potential market disruption.
