Nomura

Nomura was the sole financial credit to look at the primary market on Tuesday, making a rare appearance in sterling to sell a five year deal. Attractive arbitrage options could lead other issuers to look at sterling later in the week, according to some FIG syndicate managers.

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.

After a lengthy absence from sterling, Instituto de Crédito Oficial is keen to reestablish itself as a permanent name in the currency. The Spanish agency sold its first new issue in the sterling bond market in five years this week, while Finland came soon after with a five year.

Turbulence hit a subordinated debt market that seemed to be about to hit its stride this week, as deals from Deutsche Bank and Erste Group slumped in the secondary market straight after sale.

Auctions will be the main source of euro issuance from sovereigns, supranationals and agencies for the rest of the year, after the European Stability Mechanism this week opted against sounding banks for a syndication during its last deal window next week. But the market was strong for issuers that did come this week, with a pair of deals priced at the tight end of initial price thoughts.

Jeremy Bennett, Nomura’s EMEA CEO, resigned from the bank this week to pursue other opportunities in the charitable sector and in emerging markets.

Rating: Baa2/BBB/BBB+

Finland returned to the sterling bond market on Wednesday with its first new deal in over a year. It came hot on the heels of Instituto de Crédito Oficial, which on Tuesday sold its first new issue in the currency in five years.

Spain could wrap up its funding target for the year at an auction of three and five year debt on Thursday, but while the yield is likely to fall on the shorter bond the longer dated paper’s yield is set to rise. Meanwhile, Cassa Depositi e Prestiti looked set to pass its first syndication test since May after setting pricing on a January 2018 bond at the tight end of initial price thoughts on Wednesday.

A busy week in non-core markets saw Rentenbank return to the Canadian dollar market in size, the Central American Bank for Economic Integration (Cabei) price a new Swiss franc deal inside its curve and a quartet of SSAs access the kangaroo market.

Ian White, managing director and senior fx options trader at Nomura in New York has left the firm.

Santander returned to covered bonds this week with its first deal in nearly two years which, by virtue of its sheer size and duration, was remarkable. The two tranche deal included a 20 year piece that has not been seen in covered bonds for seven years. This was targeted to asset managers and insurers in the private sector — in sharp contrast to many other deals such as a €250m four year tap from LBBW that the Bundesbank mostly bought. The trades rammed home the distortion the European Central Bank's purchase programme (CBPP3) is causing the covered bond market which market makers said had potential to cause considerable mark to market pain.