France
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Investors piled into a 10 year covered bond from Société Générale this week, even though it was the fifth from a French issuer in the same tenor in the last month. But with issuers incentivised to pre-fund ahead of 2018, some market participants say that investor resistance will be seen before year-end. -
After three days without a deal, the euro corporate bond market reopened with nearly €2bn of new issuance from three different issuers. The auto finance lender, FCA Bank, issued a three year deal, French electrical equipment manufacturer, Legrand, sold six year bonds, while French toll road operator, Cofiroute offered a 10 year transaction.
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Eurazeo, the private equity group, is selling a 4.56% stake in Elis Services, the French bed linen and laundry company, through a block trade of about €220m.
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The covered bond market has not looked this strong all year, and with the European Central Bank (ECB) widely expected to announce a tapering of asset purchases this month, borrowers are highly motivated to issue in size and duration — a message that BPCE understood loud and clear when it issued a long 10 year on Wednesday.
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Elis, the French laundry services company, issued a €400m convertible bond on Tuesday to refinance its £2.2bn acquisition of Berendsen in the UK, which closed in September.
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Total, the French oil company, has been a frequent issuer of euro bonds, raising €7bn in 2016 and more than €5bn in each of the two previous years. However, it waited until the last week of September to sell its first new issue in euros in 2017.
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Two more public sector borrowers brought strong trades to finish a bumper week of dollar deals, both printing $1.5bn of short end dollar paper.
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The euro public sector bond market bounced back in fine fashion this week after a shock result in the German federal election, leading to some well oversubscribed trades. A potential Catalonian independence referendum is also not affecting demand, said bankers.
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A glut of short end dollar issuance this week is set to ramp up on Thursday, after a pair of rare names in the currency mandated on Wednesday. The trades will follow a strong showing from Finnvera after the Finnish agency — also an uncommon name in dollars — printed its largest ever trade in the currency.
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Both investment grade corporate bond new issues on Wednesday came from French issuers. Surprisingly, Total issued its first euro bond of 2017, while PSA Banque France sold its second.
