Germany

Rating: A3/A-/BBB

Several market players have said family offices in need of cash are struggling to come to terms with restrictions on companies that have taken state aid to survive the coronavirus pandemic paying dividends. This has made other forms of debt, such as Schuldscheine, with no bans on dividend payments, more attractive.

Barry Callebaut, the Franco-Belgian chocolate maker now registered in Switzerland, launched a Schuldschein on Tuesday offering investors tenors "upon request" alongside two, five and eight year maturities. Robert Bosch did that too, when it reopened the market last month. This is a feature that arrangers say will increase in a post Covid world.

Germany is set to announce extra fiscal stimulus next week, a portion of which will be dealt with at regional level. But one state treasury official does not believe it will affect his Land's borrowing programme.

Deutsche Bank was on target to launch its first ever green bond on Tuesday. Investors were piling into the deal, which was said to have included a healthy premium at the outset.

Deutsche Hypo took advantage of the public Pfandbrief market before the coronavirus crisis struck and since then has been busy issuing privately placed senior deals. Spreads have since tightened, which should help issuance bounce back. But ready access to favourable European Central Bank repo funding means supply will be restricted. Some parts of the German commercial real estate market are likely to be facing trouble too, but even so, Pfandbrief investors are well protected.

The International Finance Corp returned to the Australian dollar bond market to fund its response to the coronavirus pandemic on Monday, while at the end of last week BNG capped the strongest month for SSA Kangaroo deals for over nine months.

KfW has made the first adjustment to its 2020 borrowing needs by doubling the size of its US commercial paper programme, with the Gerrman agency set to review its overall funding target at the end of June.

MEPs proposed a series of amendments to the Capital Requirements Regulation (CRR) this week, including a couple that could compel banks to stop paying additional tier one (AT1) coupons during the coronavirus pandemic.

France impressed as it received a record €51bn order book and paid a small new issue premium with its first syndication since the outbreak of the Covid-19 pandemic. The sovereign was joined in the long end of the curve this week by two sub-sovereign borrowers as investor appetite for duration grows, with more supply expected to follow.

Germany would be wise to consider diversifying its colossal funding needs with a syndication in dollars — a currency in which it is no stranger and which has become more attractive for euro-based funders, according to a head of public sector debt capital markets at one of the sovereign’s primary dealerships.

Commerzbank and Crédit Agricole this week showed that banks do not have to pay big premiums for subordinated paper, with investors regaining their appetite for risk during the coronavirus pandemic.