North America

The return of heightened market volatility this summer has cast a shadow over final few months of 2019 for equity capital markets. Investors are weighing up whether to buy new deals in at a time of heightened geopolitical risk and deteriorating macroeconomic conditions.

Proofpoint, the California-based cyber security company, became the latest issuer this week to take advantage of the booming market for US technology sector convertible bonds, raising $800m to finance its growth.

Canada's Equitable Bank has announced plans to issue its first covered bond, possibly as early as next year. Its decision follows an increase in Canada’s regulatory issuance limit and paves the way for several other smaller Canadian banks to follow suit.

HSBC Bank Canada is set to meet investors with a view to issuing the first dollar covered bond since the summer break and its second covered bond ever. The plans comes amid a growing euro pipeline and follows the first deeply negative yielding euro trade.

The return of heightened market volatility this summer is leading to investors looking at defensive assets as fund managers consider how to ride out a possible turn in the economic cycle.

Mexican lender Banco Mercantil del Norte (Banorte) is looking to sell its third Swiss franc bond, breaking a two-week hiatus in cross-border issuance from Latin American borrowers.

PG&E’s high yield bonds are trading above par, even as Chapter 11 bankruptcy proceedings advance at the Californian gas and power company. According to one credit research company, bad news may even be good news for the bondholders.

With slowing growth in the global economy, and heightened trade tensions between the US and China, the bear case for equities remains very strong as 2019 enters its final stretch. However, there is still a strong bid for convertible bonds, especially deals from the technology sector, according to equity-linked investors.

LiquidityEdge, which operates an electronic marketplace for US Treasuries, could now look at offering a similar service in the European government bond market after its purchase by MarketAxess. The latter’s president, Chris Concannon, sees the pressure European banks face to cut costs as a boon for trading automation in the region.

The US corporate bond market continued to crank out investment grade deals despite fears of a global recession battering risk assets this week.

Market participants are confident that FIG issuance will pick up next week but there are concerns around secondary performance. They are likely to pay close attention to how this week’s deals from Goldman Sachs and Credit Suisse fare before marketing their own.

US corporates are turning to convertible bonds to finance themselves while it is still possible to achieve attractive terms, before the economic outlook deteriorates, leading to the best two weeks of issuance volume in 2019.