France

French covered bond issuer BPCE attracted almost €1.4bn of demand for its seven year as the need to price over OATs conferred a generous new issue premium. But with French covered bonds trading much tighter than OATs in the 10 year tenor there is a growing sense that a new 10 year issue could soon price much tighter than France.

The prospect of a far-right leader becoming president of France rocked government bond markets this week. It led to a rare pulled French agency deal and will cause the country’s banks problems with their own huge funding needs. But as other issuers in eurozone countries facing elections showed, the picture of the risks ahead is complicated. Craig McGlashan reports.

Equity-linked bond issuance, lagging behind demand in Europe, showed a burst of vigour on Thursday with the launch of three deals, including substantial convertibles for Vinci and Severstal that were both eagerly received.

Fears of a far-right win in the French presidential election have left the country’s banks in a tricky position. They need to raise large amounts of non-preferred senior bonds this year but, with spreads so volatile, any attempt to do so is likely to be fraught with risk and expensive.

The pipeline of environmental and social governance bonds is filling up with European public sector borrowers. Two are set to put on green bond roadshows in the weeks to come while a third is planning its social bond debut this year.

France’s Klepierre printed a €500m 10 year trade on Thursday, with bankers still waiting for a euro issuing corporate to take the step and stretch maturities in the currency further.

It took a trim of the offering size and issuer’s leverage ratio to sway high yield investors, but French glass packaging manufacturer Verallia finally priced its new bond on Thursday.

Elis, the French bed linen and laundry company, has completed its oversubscribed €324m rights issue to finance the reduction of its leverage after buying competitors Indusal in Spain and Levebras in Brazil.

The French bank’s recent changes to its equity capital markets division show it is serious about growing its European ECM business outside France, writes David Rothnie.

Consumer goods company Unilever priced a €1.2bn dual tranche bond on Wednesday that came partially inside the French government curve, as investors scrabble for perceived haven assets amid sharply deteriorating market sentiment.

French bottle maker Verallia served on Wednesday an updated version of the offering it had to pull in October, when its shareholder Apollo disagreed over the terms with investors. The deal is now smaller, and the issuer less leveraged.

The rise of populism in Europe has claimed its first capital markets victims. Brace yourself for more.