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Tightening absolute and relative valuations have raised some concerns, but FIG assets remain in vogue thanks to higher rates
◆ Simultaneous execution with Alphabet's record deal bodes well for others ◆ More FIG names likely to print in near future ◆ Other European banks diversify funding in Singaporean and Australian dollars
Diverse US senior FIG issuance jostles with perpetual and tier two capital from foreign and domestic banks
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Funding across all parts of the capital structure is available with issuers likely to prioritise unsecured borrowing
With masses to fund and spreads super-tight, banks will race to market, but central banks are expected to tighten
Banks could rush to issue as fast as possible, taking advantage of remarkably tight spreads
Growing pipeline and fiercer competition had threatened to shake the darling bonds of May
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Market participants are debating whether the risks to additional tier one coupons have risen or fallen after the European Central Bank urged banks not to pay equity dividends for at least six months. -
Banks will have an extra year to comply with the latest set of bank capital rules, with the Basel Committee telling the industry on Friday to focus on responding to the coronavirus pandemic instead.
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Toronto Dominion Bank attracted a slightly larger order book for its three year dollar covered bond on Friday than Bank of Nova Scotia did for a similar deal issued on Wednesday. Both deals offered a considerable pick-up to where they would have been expected to be priced in euros, but the overall spread outlook remains a subject for hot debate. At the same time on Friday, Canadian Imperial Bank of Commerce was set to issue a ‘blow out’ three year Swiss franc deal.
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Market participants are already questioning the legitimacy of new ‘expected loss’ accounting rules, with the eurozone, the UK and the US having all now softened the application of their standards for banks during the coronavirus crisis.
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Unusual or less traditional ways of trading bonds — via electronic platforms and exchange-traded funds — look set to come out well from the recent market turmoil.
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The coronavirus crisis has focused attention on how companies can get access to cash, and for many, that is a top priority. However, there are some that feel they have enough, and are going in the opposite direction: spending it for financial gain. Many, and even some banks, are considering buying back bonds at the current cheap prices.
Polls and awards
The winning institutions and individuals will be revealed at the awards dinner on June 17 in London
Don't miss your chance to choose this year's Bond Award winners
The covered bond market gathered in Seville to celebrate its standout deals, institutions and individuals
Last chance to vote for the best winning deals, individuals and organisations in the covered bond market
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