Germany

Senior SSA bond market figures are already banking on the European Central Bank extending its purchase programme to include German regions, the response to a State of Hessen benchmark seemed to show on Thursday. Virginia Furness reports.

Evonik Industries, the German chemical company, has been a regular feature of the equity block trade market this year as CVC has sold down its stake, and what may turn out to be the last trade came on Monday night, when CVC sold 1.9% of the company.

Rumours that the European Central Bank will add German regions to its public sector purchase programme fuelled demand for a State of Hessen benchmark on Thursday, said bankers.

Continental Rubber of America, a wholly owned subsidiary of Germany's Continental, issued a €500m no-grow bond on Thursday, returning to the bond market after a two year gap.

HSH Nordbank issued a €500m five year mortgage Pfandbrief on Thursday. Despite offering an attractive new issue premium and a rare Pfandbrief spread over mid-swaps, leads struggled to fill the order book, with the structural upheaval facing the issuer compounding difficult market conditions.

Landesbank Baden-Wuerttemberg (LBBW) went for size on Thursday as it was set to print a €500m tap of its outstanding September 2017 floating rate notes, bringing the total outstanding debt to €1.15bn.

European benchmark issuance is expected to rise in 2016 led by German banks, which have seen double digit growth in mortgage lending this year, say analysts at Commerzbank. The next largest regional supply is expected from issuers in France, then Spain followed by Canada, say analysts at Société Générale.

A German state is on track to wrap up its funding for the year on Thursday, as an agency from the country is tipped to bring a benchmark next week.

Deutsche Hypo priced a €500m six year on Wednesday in line with previous German deals, but with a considerably smaller oversubscription ratio than its previous two issues. Bankers were not hopeful the outlook for covered bonds would improve much in the next few months, but took heart from the fact that most investors are obliged to put their money to work.

European Stability Mechanism printed a solid €1.5bn bond on Tuesday, falling just short of completing its funding target for the year.

KfW and the City of Paris built healthy books for no-grow green bonds on Tuesday, as some bankers suggested the KfW deal showcased the lesser execution risk amid tricky conditions that green bonds offer over conventional deals.

BMW returned to the bond market on Tuesday with a €1.25bn deal, its first issue since the Volkswagen emissions scandal made investors reassess their attitude to the car industry.