Germany
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German pharmaceutical company Bayer delivered on its plans to raise more than €20bn in senior bonds with an eight tranche dollar deal on Monday and a four tranche euro transaction on Tuesday. The dollar deal was three times oversubscribed and the euro deal nearly 4.5 times. -
LBBW’s debut green Pfandbrief attracted a larger order book from a wider set of international investors compared with a vanilla deal, suggesting the bonds have good scope to perform relative to ordinary deals.
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Legal & General has announced a £325m buy-in to Heathrow’s pension scheme, while simultaneously lending £160m to the London airport company through a private placement note.
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LBBW has mandated leads for its first Pfandbrief secured on green mortgages. The transaction follows a similar deal last week from DNB Boligkreditt and comes after LBBW’s inaugural green senior deal launched in December 2017. Several other covered bonds are expected next week.
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It is a mark of how far the market has come from a barren week at the end of May that not just one, but three deals, totalling €2.75bn, were priced on Friday. The European Central Bank meeting and the expectation of a deal from German pharmaceuticals company Bayer played their part in the issuers’ decisions on timing and the order books justified those choices.
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The week began with that rarest of things in recent times, a welcoming political backdrop. It was marred, however, by monetary policy meetings from the two most important central banks in the world. While the US Federal Reserve’s second rate hike of the year was a foregone conclusion, it caused the dollar curve to flatten still further, making the euro market even more fertile funding territory than it has been for SSAs. But even so, euros had its own struggles this week, facing what one head of SSA syndicate called “one of the most important and unpredictable European Central Bank meetings for a long time”. Lewis McLellan reports.
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The planned takeover of Innogy by E.On and asset swap with RWE creates an unusual, if not unprecedented, situation in the green bond market. Innogy’s €850m green bond, issued last year, will become a liability of E.On, but the windfarm assets to which the proceeds have been allocated will end up with RWE.
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With syndicated loan business thin on the ground in EMEA this year, E.On had no trouble achieving a 100% hit rate among its relationship banks, when syndicating the €5bn loan financing for its €20.42bn takeover of Innogy.
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The European Central Bank announced on Thursday that it will bring its €2.5tr asset purchase programme to an end in December. However, the assertion that hikes to its deposit rate would not come before September 2019 lent the proceedings a dovish note.
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In the political sphere, Europe and North America appear to be travelling in separate directions since the election of Donald Trump as US president in November 2016, as was evident at the recent G7 talks.
