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◆ Deal followed HSBC's €3.75bn three part deal... ◆ ... and paid less NIP, tackling shorter end of curve ◆ Book grew after price revision
◆ 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
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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Poland's Bank Pekao is planning to tap the Eurobond market for the first time in 2020, in order to set down a senior benchmark for the subsequent issuance of capital ratio raising bonds, according to Pawel Rzezniczak, head of investor relations and corporate development at the bank. -
Issuers are set to gravitate towards selling higher yielding regulatory debt in the post-summer issuance window, so that they can attract investors and compensate for low overall interest rates. But FIG bankers are unsure what concessions will be needed to get deals away.
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Swiss investors who have been kicking their heels for the last month or so have been kept busy this week by Munchener Hypothekenbank (MunHyp), comfortably the most frequent international borrower in the Swiss franc market this year.
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Issuers and investors are rapidly coming to terms with the idea that negative yields will become a permanent feature of the financial institutions bond market. Debt capital markets officials say that it is now only a matter of time before a bank plucks up the courage to sell a new senior bond with a sub-zero yield, following examples set in the covered bond market.
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A senior bank investor buying for his firm’s liquidity coverage ratio (LCR) portfolio told GlobalCapital on Thursday that he does not fear negative yielding covered bonds. What he fears is a glut of long dated issuance that he cannot buy. But issuers remain unwilling to bring serious size with a negative yield.
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Lloyds Bank dipped into dollars for senior funding on Wednesday, a day after UBS launched a deal in the same currency. A syndicate official noted that European financial institutions are being tempted across the Atlantic amid more inhospitable conditions in the euro market this summer.
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