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◆ Rising investor sensitivity due to tight unsecured FIG spreads ◆ Deal centred around real money orders after hitting €4.5bn peak book ◆ Hardly any concession left on shorter tranche, minimal on longer one
◆ Weaker backdrop for FIG issuance ◆ Deal printed with a negligible spread above previous, shorter bond ◆ Nearly triple digit spread lures investors
◆ Strong outcome despite French risk concerns ◆ Participation from a 'who's who' of sterling real money ◆ Sterling market stronger than euros
Data
Observers blame slower bookbuilding on deal-specific factors but others see warning shots for whole market
Covered market provides 'the deepest pocket of demand' among FIG asset classes
Capital deals and a tight Nordic senior print point to what lies ahead for issuers
The single currency stands out as the most attractive funding source while the US dollar market remains open in size
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Banco de Sabadell was up to four times subscribed for a tightly priced green deal on Tuesday — its debut in non-preferred senior format. Other FIG issuers are also considering adding ESG labels to more subordinated products, with Raiffeisen Bank International planning a green tier two for this week. -
Eika Boligkreditt and Oma Savings Bank found good demand for their covered bonds sold on Tuesday with small deal sizes, environmental appeal and European Central Bank providing a boost. Even so, syndicate bankers were not convinced the market was back to full health.
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French insurer Macif is set to issue up to €1.75bn of subordinated debt to fund its coming acquisition of Aviva France.
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Fast money accounts have been selling eight and nine year European Union bonds in anticipation of supply this week. But since these buyers are not expected to get much of an allocation of the fresh bonds, traders predict a modest short squeeze.
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Piraeus is set to become the first Greek bank to print an additional tier one (AT1) bond — the next step in its capital plan after the closing of its €1.4bn equity raise last month.
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Swedish Covered Bond Corporation’s (SCBC) benchmark eight year deal, syndicated on Monday, was slow to build and, even though the final spread looked fine, the process clearly showed that investors are reticent to buy deals at prevailing levels.
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