RBC Capital Markets
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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.
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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.
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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.
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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.
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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.
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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.
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IHS Markit exploited the lull in high-grade supply to grab investor attention with its investment grade debut.
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Concerns from some fund managers about the terms of Altice’s new €2.5bn-equivalent bond were swamped by orders from other investors eager to bag single-B paper with a big coupon from a core high yield issuer. After a series of successful investor push-backs on deal terms, the debt laden French telecom proved this week that borrowers still can walk away with loose covenants, writes Victor Jimenez.
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Canadian Imperial Bank of Commerce (CIBC) sold its first senior unsecured Swiss franc debt on Thursday as opportunities for arbitrage grow for well-rated credits.
