LBBW

Bank Nederlandse Gemeenten hit screens for its first euro benchmark of the year on Wednesday. The deal will be closely watched by the market as an important reference for what the environment looks like for the smaller euro public sector borrowers in 2019.

LBBW this week issued a long three year public sector Pfandbrief at the tightest spread of the year, showing just how receptive investors are to supply, particularly for strong names in short tenors.

ABN Amro and LBBW issued perfectly respectable, though uninspiring, euro covered bond trades on Thursday, deals that stood in contrast to a heroic deal from Bank of Montreal (BMO).

LBBW decided against competing for investors' attention with Commerzbank on Wednesday and has opted to give investors time before opening order books for its first covered bond of the year on Thursday.

DCM bankers believe financial institutions will seek to hold back on launching new bond deals if markets cannot find a footing at the beginning of the new year.

Commerzbank and LBBW are looking to become one of the first issuers in the euro market in 2019, having both announced new mandates for covered bonds on Friday.

Public sector borrowers are confident going into the euro bond market next year, with reinvestments from maturing bonds held by the European Central Bank likely to cap any spread widening from the end of quantitative easing. But political threats — from populists polling well ahead of European Parliament elections in May, Brexit probably in March and the Italian government’s stand-off with the European Commission over its budget plans — are likely to bring volatility, meaning timing will perhaps be more important than in 2018. GlobalCapital brought together European SSAs, investors and investment bankers to discuss what 2019 holds for the euro market — as well as the SRI sector and new technology.

A revolution is occurring in the Schuldschein market. This sedate and sober instrument has shaken its fusty reputation and transformed into a bustling hotbed of technological progress. Seven digital platforms sprang up in 2018, each declaring a grand ambition to drive efficiency. But with platforms jockeying for position, under the eye of the German regulator, some question the rate of change and the authenticity of some agents of it.

European borrowers that flit between public and private debt have been choosing the Schuldschein market because of its comparatively tight pricing in the last few months but this week Freenet, the German telcoms firm, sweetened the terms it was offering investors.

Rating: Aaa/AA/AAA

The European Union will look to return to the private placement market for the first time since July 2017 to kick-off its funding programme next year. The supranational was also able to take advantage of strong conditions — since weakened — at the start of the week to bring a public market transaction.

The European Union was the sole public sector borrower in the market on Tuesday, reopening its April 2033s in a week that bankers said is likely to be the “last very good window” for issuance before the end of the year.