Germany

The European Investment Bank and the State of Brandenburg have mandated banks to bring euro deals on Thursday, in what has been an extremely thin week for supply with issuers well funded and some weakness in secondaries.

Restructured German ship lender, Hamburg Commercial Bank, has announced a tender offer for covered bonds on Wednesday. At the same time, Berlin Hyp (BHH) announced that it had bought almost €300m Pfandbrief in a recent tender which it plans to refinance with a longer dated deal.

DZ Hyp managed to raise €1bn of eight year Pfandbrief funding flat to its curve on Wednesday. The deal contrasted with one from Axa Banque SFH, which paid a much larger premium for a €500m 15 year, possibly due to far higher French supply this year and confusion with Axa Banque Europe SCF, which has already entered the market four times this year.

Sovereign, supranational and agency bond issuers are mobilising their resources to support the fight against Covid-19. The below table details the bonds they have issued, specifically in response to the coronavirus pandemic.

Axa Banque SFH mandated leads on Tuesday for its first deal of the year, a €500m 15 year, while DZ Hyp has appointed leads for a benchmark eight year Pfandbrief.

Kinnevik, the Swedish investment company, sold a 4.4% stake in German e-commerce company Zalando on Monday night with investors pouring into the trade after the US Federal Reserve boosted secondary markets.

Dr Jörg Kukies, State Secretary for Financial Market Policy and European Policy at the German Federal Ministry of Finance, speaks to GlobalCapital’s Managing Editor, Toby Fildes, on Covid-19, European policy and Germany’s financial markets.

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Private debt markets in Europe have lost their sheen in the past few months. Having grown into attractive alternatives for companies looking to diversify from public and bank markets, the Schuldschein and US private placement markets were left by the wayside during the pandemic as borrowers went for quick cash instead.

Three borrowers hit screens in sterling this week, giving the currency its biggest workout for months. Two returned to the market to take advantage of a more advantageous cross-currency basis swap but a third is taking a strategic approach.

Market participants expect European banks to take a large chunk of funding through the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO III) programme, hitting covered bond supply levels. But issuance in other asset classes should remain unaffected as banks follow through with their funding plans.

Banks are likely to consider unusual issuance windows this year given the disruption caused by the coronavirus crisis. They could even be hard at work during the summer months, according to deal arrangers.