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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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Hesitant covered bond issuers, that had been waiting for the European Central Bank to commence buying under its Pandemic Emergency Purchase Programme (Pepp), may no longer have an excuse to wait and should return to the market soon — particularly since funding levels are cheap relative to senior unsecured, but also because wider spreads may reflect the deterioration in credit risk as opposed to liquidity risk. -
The volume of new euro senior debt sold by banks has hit €10bn this week, following deals from Barclays, Credit Suisse and NatWest Markets on Thursday. Yield and spread levels remain high, but market participants have been delighted to see investors throwing their confidence behind new transactions in the middle of the coronavirus crisis.
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New senior bank bonds are proving attractive to investors at about 40bp-50bp or more over secondary levels, with UK issuers Lloyds and HSBC joining US peers in returning to the new issue market this week.
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Bank of Nova Scotia issued its first dollar covered bond benchmark since 2016 on Wednesday. The deal follows a series of retained Canadian dollar covered bonds that were pledged to the Bank of Canada after it recently broadened repo eligibility to include the asset class.
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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