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◆ Fixed rate tranches leave double-digit concessions to attract hefty book ◆ Favourable cost to dollars ◆ HSBC surpasses 2026 holdco funding plan
◆ First euro funding in almost a decade ◆ Part of early refi of its last euro bond ◆ Rarity makes it a trickier sale during heightened market volatility
◆ Landesbank increases senior market presence ◆ Slower demand due to limited familiarity beyond Germany-speaking investors ◆ Similar execution to other recent 'rich' SP bonds
Data
Conducive credit markets and tight spreads to lure issuers as risks loom on the horizon
Contrasting investor receptions in euro and sterling markets but new issue premiums rise in both
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
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Metro Bank’s failed senior non-preferred bond is rated BB+, squarely in high yield territory. But while corporates with this rating print at ever tighter yields, Metro couldn’t get its deal away even at 7.5%. Nobody expects the rating agencies to be in line with the market, but sometimes the gulf is yawningly wide.
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A run of 10 year covered bond issuance looks set to continue through to Wednesday with Bawag and Deutsche Bank announcing plans for Pfandbrief transactions. Bankers on these deals are hopeful that order book momentum improves, but some are slightly concerned that investor fatigue may be setting in. -
BBVA launched a senior non-preferred bond in the euro market this week as activity slowed after a busy period for new FIG issuance. The €1bn trade attracted orders of €1.8bn and gave investors a small new issue premium, according to a syndicate banker.
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Banco BPM spied a chance on Tuesday to issue a tier two bond to beef up its capital buffers. The Italian lender launched a 10 year non-call five deal at a 4.25% coupon — 37.5bp tighter than the initial price thoughts.
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Hypo Noe and Prima banka Slovensko competed for investors’ attention with similar sized covered bonds in the same seven year tenor on Tuesday. The Austrian transaction was priced with barely any concession and the higher rated Slovakian transaction was the first debut deal to price with a negative yield and the first from Central and Eastern Europe with a negative yield.
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Norbert Doerr is set to leave his position as head of capital management and funding at Commerzbank, after 12 years working within the German lender’s treasury team.
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