Germany

Germany smashed its return to the syndicated bond market on Wednesday with its biggest ever order book and deal in the format, which was priced flat to fair value at the final spread, according to the leads.

German meal kit delivery company HelloFresh has issued a €175m debut convertible bond to fund growth opportunities after reporting stellar first quarter results, as more consumers dine at home because of the restrictions imposed to help combat the Covid-19 pandemic in its key markets.

Germany has picked the banks that will run its first syndicated transaction since 2015 and its first 15 year bond. The sovereign will likely make its market return on Wednesday. The trade forms part of Germany's updated strategy for its colossal funding programme financing the response to the Covid-19 pandemic.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, May 4. The source for secondary trading levels is ICE Data Services.

A strong and growing deposit base, an active private placement market and sizeable proportion of prefunding has put the Pfandbrief banks in a strong liquidity position, the chief executive officer of the Association of German Pfandbrief Banks (VDP), Jens Tolckmitt, told GlobalCapital in an interview on Tuesday covering a wide range of other topics such as real estate values, the mortgage lending value and Basel III’s output floor.

Robert Bosch launched Schuldscheine with tenors varying between two and 20 years on Tuesday. The German car parts supplier is looking to raise at least €500m in a market all but shut since the coronavirus pandemic reached Europe. Participants hope this launch will prompt other borrowers to follow suit.

The Federal State of Saarland hit the market on Monday to raise €500m with its first seven year bond since 2016.

The prospect of switching out of Pfandbriefe exposed to a high proportion of foreign commercial real estate and into higher-yielding, and more liquid, Scandinavian covered bonds exposed to domestic loan portfolios that are less affected by the coronavirus, is a tempting choice. But the protection Pfandbriefe offer investors and the scarce supply outlook means spreads on the product will remain supported, said bankers on Monday.

Funding needs of regions across Europe are expected to rise this year as borrowers fund responses to the coronavirus pandemic. Spanish and German regions in particular will face heavier borrowing requirements.

The German state of North Rhine-Westphalia made its first visit to the offshore renminbi market earlier this week, continuing this year’s SSA dim sum shopping spree.

The Schuldschein market is expected to reopen in a matter of days, but arrangers will face a changed market and will have to adapt to the new corporate lending landscape created by the coronavirus pandemic.

Five years after issuing its first green Pfandbrief, Berlin Hyp (BHH) issued its first two green private placements, just before publishing it annual green bonds report on Monday. But Pfandbrief benchmark supply hopes seem distant as spreads to German Laender are prohibitively tight.