Natixis

Supportive secondary markets and tightening credit indices have deceived issuers of senior and covered bonds in the FIG market, causing five to pull the plug on new transactions over the span of five trading days. That left market participants wondering if the year is over for FIG issuance, as investors happy with returns on the year have avoided taking on further risk — despite issuers offering spreads that have previously led to successful deals, writes Nathan Collins.

After months of spread tightening and an unremitting stream of successful deals, the positive mood in the primary covered bond market finally broke this week. Amid a weakening secondary market, OP Mortgage Bank only just managed to get a deal away and AIB Mortgage Bank became the only covered bond issuer to postpone a deal this year.

Repsol, the Spanish oil and gas company, has issued a €500m 12 year bond, extending its maturity profile by five years and only had to pay a small new issue premium, according to a banker.

Thursday was a busy day for European investment grade corporate bonds, with €4.9bn issued in euros and sterling. But with a great deal of diversity of issuers, maturities and currencies, the market had more appetite for some than for others.

Three issuers from France, Belgium and Germany raised €2.5bn in the covered bond market this week, and another €1bn transaction was expected from a Finnish issuer on Friday. The deals were all remarkable for the fact that the funding levels set new records for all issuers as the ECB’s allocation continued to grow, squeezing out other investors.

Agricultural products supplier Olam International has mandated 19 banks for a $2.475bn triple tranche refinancing of a $2.22bn bridge loan that it sealed in May.

Indonesian oil and gas company Pertamina, which mandated 12 lenders for its $1.8bn five year loan in October, launched the facility into general syndication on November 18.

Mercialys, the French property company spun off from supermarkets group Casino, priced a €550m 8.3 year bond on Tuesday, in conjunction with a buyback offer for its €650m 2019 bond, to extend its debt maturity profile.

Fomento de Construcciones y Contratas, the Spanish building and environmental services company, is close to reaching agreement with its creditors on a debt restructuring, according to a spokesman for the company.

Publicis Groupe's $3.5bn loan for its acquisition of Sapient, the marketing and consulting company, is near closing, according to a banker working on the deal. A syndicate of relationship banks has been invited.

Endemol - Zenith Bank - 3i - Faurecia

The covered bond market has started to lose some of the energy and excitement that followed the announcement of the European Central Bank’s purchase programme. This week, BPCE issued a finely tuned deal that was sized precisely to demand.