France
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The covered bond market enjoyed one of its most active weeks this year, with as many as eight transactions launched, even as other markets struggled. However, while most issues were well received, the two longest dated deals dragged and showed investor concerns over duration.
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Dexia Crédit Local scored what leads said was a good result on Thursday as it brought a trade at the upper end of its size plans and tightened pricing during another volatile day for eurozone rates. KfW was also out in euros, with a tap, although it appeared to be more of a slow burner.
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Unédic played it safe by offering extra new issue concession to traverse a choppy euro market on Wednesday, ending up with a €1bn 15 year deal and a 1bp tightening from guidance. Dexia Crédit Local is out for a euro deal on Thursday, although bankers said the shorter duration trade should mean the volatility will be less of a test.
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Autodis Group, the French distributor of spare vehicle parts owned by Bain Capital, has cancelled its planned Euronext Paris IPO, blaming volatile markets.
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The European Investment Bank has printed a new Climate Awareness Bond — its sole euro green bond for 2018 — opting for an aggressive price and falling short of full subscription. A French agency will follow the supranational’s lead, mandating for a deal with the same tenor.
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The first two days of this week saw more than €10bn of bond issuance, with more than a quarter of that volume made up of three deals sold by auto finance issuers. All three deals managed to achieve new issue premiums of 10bp or less, which was tighter than the majority of deals the week before.
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German media company Bertelsmann pulled a €500m seven year corporate bond issue on Thursday as the market showed signs of indigestion after what was already one of the busiest weeks of the year for corporate issuance.
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When the euro corporate market attempted to return to full speed after a pause on Wednesday, investors were given a tough choice between three triple-B rated issuers all selling seven year bonds and another selling a sub-benchmark five year tranche. The result was a bad one for issuers.
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In a document recently circulated at EU level, Paris labelled the MiFID II equivalence regime “inappropriate”, and called for a tighter procedure — a clear move to limit UK funds’ access to EU markets after Brexit.
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The euro bond market should spring back into life next week, with a pair of quiet weeks safely in the rear view mirror.
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Société Générale has hired a veteran derivatives trader as its head of equities and equity derivatives.
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This week's funding scorecard looks at the process French agencies have made in their funding so far in 2018.