European banks don’t believe they have a free option to extend the lives of their additional tier one (AT1) securities, despite the apparent success of Banco Santander’s call policy.

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.

Turkiye Sinai Kalkinma Bankasi (TSKB) is planning to print a five year senior unsecured dollar bond on Wednesday. A lead manager on the deal said that the size of the note is likely to be below benchmark because the bank has limited liquidity needs.

Turkish lender Yapi Kredi ventured into the green bond market for the first time on Friday with a rare dollar private placement, its first since January 2016, according to Dealogic data.

Seven borrowers from Greater China raised about $2bn from new dollar bonds on Monday, while Hong Kong's Cathay Pacific tapped the Singapore dollar market.

Four covered bond issuers from Germany, Austria, France and Belgium have announced deals that are expected to be launched on Tuesday and will be heavily bought by the European Central Bank.