Nordea Markets

Market participants expect to see the end of “vanilla” deals in the European bank bond market, as tier two debt becomes the latest asset class to embrace call periods over call dates.

The financial institutions bond market in euros was on hold on Tuesday, as European issuers saw no reason to rush into doing deals while global equities were selling off and interest rates were being buffeted by expectations of inflation.

Nordea made a rare entry into the euro tier two market on Monday, taking advantage of strong issuance conditions to steer its pricing in close to fair value.

EQT achieved a strong response from investors on Friday when it launched the first sustainability-linked bond from a private equity firm, and only the second from a financial company. The €500m deal is tied to greenhouse gas emission cuts and gender diversity metrics.

Europe’s high grade corporate bond investors clamoured for spread this week, with low triple-B rated companies Aker BP and Holding d’Infrastructures de Transport (HIT) finding ample demand a day after Eni had sold hybrid debt.

The demand for sustainability-linked bonds was laid bare on Thursday, as French minerals company Imerys’s SLB commanded more than double the demand of Swedish property firm Sagax’s conventional trade, despite both deals sharing major similarities.

Europe’s high grade corporate bond investors showed for the second day in a row on Wednesday how hungry they are for spread. Low triple-B rated credits Aker BP and Holding d’Infrastructures de Transport both increased their bond issues after bumper demand.

Vestas, the Danish wind turbine maker, has signed a €2bn-equivalent facility linked to key performance indicators around sustainability. It was the first time the borrower has structured bank debt in this way.

Pandora, the Danish jewellery maker, has signed a €950m sustainability-linked loan and in the process become the latest company to repay, early, coronavirus pandemic crisis funding taken out last year.

Solidium, the organisation that manages the investments of the Finnish government, has reduced its stake in SSAB after the steel maker reported a strong set of first quarter earnings.

Finnair has renegotiated the covenants on its €175m revolving credit facility, as the company endured a quarter of sizeable losses and increased its annual cost savings target for the third time since the coronavirus pandemic began.

Danfoss, a Danish engineering firm, and UK bottling company Coca-Cola European Partners found the biggest demand at longer maturities in their multi-tranche bond issues on Wednesday, as inflation fears fade from Europe’s corporate debt market.