France

Covered bonds issued this week by Axa Bank and Lansforsakringar Hypotek (LF Hyp) were priced at — or inside — fair value, partly reflecting a technical squeeze that was aggravated by the European Central Bank’s move to step up purchases in the secondary market.

Equity capital markets in EMEA have stepped up a gear this week, with a wave of new IPOs being announced, a handful of large block trades and the launch of a highly anticipated €8bn rights issue.

The French government has sold the rights to new Electricité de France shares it does not want to take up as part of the company’s €4bn rights issue, though an accelerated bookbuild launched on Tuesday night.

Neil Walker, non-executive director of LCH’s SA and Group boards, is standing down to pursue 'executive commitments' elsewhere.

Multilateral development banks will focus more on providing credit enhancement and support to help small, emerging market borrowers bring their green bonds to market, according to the head of climate change at the European Investment Bank. Meanwhile, a French region visited the green market on Tuesday.

The European Stability Mechanism returned to stellar form this week, hitting the sweet spot for euro demand and exceeding its first quarter funding target. Bpifrance Financement will look to follow up the supranational’s success on Wednesday.

Lansforsakringar Hypotek (LF Hyp) has issued its longest dated covered bond which, with a positive spread to mid-swaps, gives a slight premium to other Swedish banks but no concession to its own curve.

Axa Bank has priced its largest covered bond in almost five years at the tightest spread it has ever achieved and inside fair value. The choice of tenor, timing and final spread were instrumental in the successful outcome.

The European Stability Mechanism has nipped in ahead of a European Central Bank Governing Council meeting later this week to mandate banks for a 10 year euro benchmark. Other euro supply this week could come from Région Île-de-France, which held a global investor call on Monday for a green and sustainability bond.

SoLocal Group, the French marketing services provider, has completed its €400m rights issue, which involved a debt-for-equity swap.

Corporate borrowers are taking advantage of rising political worry among investors by issuing short dated floating rate notes in euros which stand a good chance of bearing negative yields, write Michael Turner, Ross Lancaster and Jon Hay.

Despite the ECB’s backstop bid, covered bond trading is a tough business. Tight spreads may help investors score mark-to-market gains, but discourage them selling since replacement assets are scarce. But the market is evolving, e-trading is on the march and traditional dealer rankings are changing too.