France
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Verallia, the French glass bottle maker, started sounding investors on Thursday for an €860m-equivalent bond to finance its acquisition by alternative investment fund Apollo Global Management. -
Santander Consumer Finance and Société Générale both opted for defensive three year senior unsecured trades on Thursday, the first euro benchmark FIG deals in three weeks.
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Greek parliament gave bankers the result they were hoping for on Wednesday night, providing strong market conditions for two well established eurozone issuers — Commerzbank and BPCE — to issue five year bonds, taking a combined €1bn in the covered bond market. Sizable orderbooks and minimal new issue premiums proved that the market is very much in full operating mode.
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French financial institutions and corporates have been quick to jump at the funding opportunity offered by the offshore RMB bond market. Despite the line-up of success stories, however, French asset managers feel the market has some way to go before it comes of age.
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Banque de France (BdF) is working with the financial sector to ready the market for the China International Payment System (CIPS) launch later this year, and has told GlobalRMB that the progress of the RMB means that inclusion in the IMF's SDR basket is simply a matter of "when and how".
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Caisse Française de Financement Local proved the resilience of the covered bond market on Thursday by printing the first euro deal from a European issuer in three weeks. The defensive three year tenor was exactly what the market needed, according to rival bankers, and paves the way for more short-dated euro issuance.
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It's been a good week for Europe's renminbi ambitions with the State Administration of Foreign Exchange (Safe) extending a Rmb50bn RMB qualified foreign institutional investor (RQFII) quota to Hungary, while China Construction Bank (CCB) listed its RQFII ETF on Paris’ Euronext.
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Santander has issued European covered bonds from Spain, Portugal and UK but could soon be about to issue Obligations Foncières from a new French programme. However, the sub benchmark sized deals are likely to be placed with the ECB said bankers.
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Compagnie de Financement Fonciere (CFF) has issued the first euro denominated three year conventional covered bond this year. Until recently, short dated covered bonds were trading with a negative yield in euros, something which made them impossible to sell. CFF’s trade has proved that this tenor is now open.
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The long end of the French, Belgian and Dutch covered bond market is effectively closed for primary issuance because the rout in government bonds has made them too expensive. But bankers are hopeful that, with careful consideration of tenor and pricing, benchmark issuance should eventually return in shorter tenors, though probably not until June.
