Germany

FMS Wertmanagement has printed its third deal of the summer, scooping up €1bn of short dated euro paper with an opportunistic trade.

Air Berlin, the second biggest airline in Germany, is at risk of defaulting on more than €600m equivalent of bonds, including €130m of convertible bonds, after the carrier filed for insolvency.

Münchener Hypothekenbank issued a tightly priced nine year Pfandbrief on Wednesday, just as Commerzbank mandated leads for a 10 year. The deals are likely to be followed by others from core Europe and especially from borrowers looking to fund at the long end, where execution risks may rise in the run up to the European Central Bank’s meeting on September 7.

Muenchener Hypothekenbank (MuHyp) managed to pull its Munich-based lead managers away from their beer gardens and swimming pools on Tuesday to announce a Pfandbrief mandate, though somewhat late in the day.

FMS Wertmanagement is set to dip into the market for the third time this summer, as it seeks to meet an increased funding target for the year.

Public sector bond supply this week is so far thin on the ground, despite conditions calming after fears of a conflict between the US and North Korea fell. The only supply on Monday came from a German issuer, despite some analysts pointing to a “mild risk-on tone” in eurozone debt markets.

Covered bond spreads were marginally cheaper to Bunds across the board on Friday after a flight to safety caused German government bonds to rally. The move should bode well for the many issuers that will need to refinance maturing Pfandbriefe in the next few weeks.

September is fast approaching, bringing with it one of the most hotly anticipated European Central Bank (ECB) meetings ever, but the central bank will do its utmost to avoid causing drama, say investors.

FMS Wertmanagement has upped its funding requirement for 2017 by more than 50%, a move that is likely to gladden SSA bankers who are expecting a bunfight for mandates come late summer.

The public sector dollar market looks set to enjoy healthy flows for the rest of the summer, with some small deals lined up and geopolitical tensions failing to cause any large disturbances to rates.

Two further Schuldschein deals at least doubled in size this week after Lonza's bumper earlier deal, as the market eclipsed its issuance level for the whole of 2016.

Inflammatory rhetoric between the US president and North Korea failed to disturb rates markets on Wednesday. FMS Wertmanagement on Wednesday brought a tightly priced deal that drew heavy central bank demand — although it fell “just a touch” under full subscription.