RBC Capital Markets

While Brexit negotiations continued and banks juggled their contingency plans for various outcomes, two UK corporate issuers successfully accessed the euro corporate bond market this week.

Royal Bank of Canada boosted sentiment in the covered bond market on Thursday with a tightly priced €1.5bn seven year. At the same time Société Générale issued a defensively priced and well subscribed €750m five year.

After a plethora of small deals, the covered bond market look set for a proper test of appetite as Royal Bank of Canada prepares to issue a seven year euro denominated covered bond.

The autumn term has definitely begun in Europe’s corporate bond market. BMW and Daimler, which launched deals last week, may have been the scholarship swots who returned extra-early, but this week the whole sweaty gang of issuers is back en masse, and making plenty of noise.

The second deal in two days from a Volkswagen entity was never expected to hit the heights of the triple-tranche euro deal the day before. However, Thursday’s sterling trade still received a very strong response from investors.

Bank Nederlandse Gemeenten kept the sterling tap running as the sole deal in the primary SSA market on Monday, with a Norwegian agency lining up to follow it on Tuesday.

The Bank of England on Thursday raised its base rate by 25bp to 0.75%, a move that was widely expected and one that brought next to no market reaction — keeping conditions calm for what could be a record year for SSA sterling issuance. L-Bank added to that tally on the same day with a deal that came 25% above its initial size target.

A pair of taps from the Council of Europe Development Bank (CEB) and KfW on Tuesday — ahead of the Bank of England’s expected rate rise later this week — ensured the non-UK sterling SSA market remains on track for a record year of issuance.

SSA issuance in Canadian dollars is enjoying a renaissance, with a pair of deals this week taking July to a record monthly volume and a tenor last seen several years ago returning.

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The Canadian dollar market could see a resurgence in SSA issuance, said bankers, after the European Investment Bank printed a deal in a rare tenor for the currency this week.

IHS Markit exploited the lull in high-grade supply to grab investor attention with its investment grade debut.