France

Investors have come out in huge numbers to buy the three corporate hybrid deals that have been sold so far in 2019. However, the excess demand is unlikely to be sated as the year unfolds.

The only large European IPO being actively marketed, the Paris flotation of logistics company Gefco, has been delayed. Banks on the deal are holding fire on a launch until they can find a better window.

The covered bond market remained in fine fettle on Friday as Eika Boligkreditt found strong demand for the seventh 10 year of the week and Helaba issued a benchmark-sized tap of an old 10 year. At the same time BayernLB picked leads for another 10 year and Cafill mandated for its first social covered bond.

Société Générale this week issued a highly oversubscribed €1bn eight year that paved the way for follow-on French covered bonds from Credit Mutuel CIC — which attracted a €5bn order book for its two part deal — and La Banque Postale.

French hotel company Accor launched new hybrid and senior bond issues on Thursday after announcing the deals at the end of last week. The new deals finance tender offers for some of the company’s existing hybrid and senior notes.

French supermarket chain Auchan attracted plenty of demand for its third consecutive January new issue but it had to pay a hefty new issue premium to ensure the deal got done. The supermarket sector is one of several retail sectors priming investors for poor annual results.

Four covered bond issuers returned to the market on Wednesday and, in contrast to the start of the year when concessions were 5bp-7bp, none paid more than 2bp.

The start of 2019 has been particularly quiet for equity capital markets bankers, but investors have been engaging with the only new listing in the market.

Fearful of missing out and, in the absence of competing credit supply, investors piled into six covered bonds on Tuesday with a combined value of more than €6bn.Royal Bank of Canada’s deal epitomised the state of investor frenzy as it was able to issue the largest deal of the year with a negative new issue premium.

New issuance returned to the corporate bond market on Tuesday as Auchan and Vonovia attracted €8bn of demand for their new deals after two days without any trades. The new issuance spreads they paid differed markedly however.

BNP Paribas has made a string of senior appointments to complete the reorganisation of its corporate and institutional bank that began at the end of last year.

Leveraged finance markets in Europe are looking up, and bankers expect they may even see some deals priced before long.