Santander

Leading investors are starting to chafe at the pricing of deeply subordinated bank capital, even as a vast €45bn wave of orders carried this week’s trio of euro and sterling new issues from Banco Santander, Danske Bank and Nationwide Building Society to record low coupons, write Graham Bippart and Tom Porter.

Investors have put in nearly €45bn of orders across three new additional tier one deals, in a week that has seen numerous records in the asset class broken. The activity was variously described by bankers as a “bonanza” with “no end in sight” for demand, causing both excitement and a tinge of bewilderment among market pros.

British American Tobacco raised €1bn in the bond market today, completing a hat-trick of deals by the three leading European cigarette makers. The transaction’s heavy oversubscription suggested there had been no impact either from the clustering of tobacco issuance, or from Russia’s alarming intervention in Ukraine.

Nationwide Building Society has thrown its hat into the ring for selling additional tier one debt, mandating lead arrangers to gauge interest in what would be the first such deal to be denominated in sterling and the first AT1 paper to be sold by a non-bank institution.

Gas Natural Fenosa, the Spanish gas and electricity company, issued on Thursday the first Spanish corporate bond of the year, and was swamped with a €5bn order book for the €500m no-grow issue.

BP continued a busy month of bond issuance on Tuesday with a €2bn issue, which echoed in scale the €2.5bn dual trancher it sold in February 2012.

Peripheral eurozone sovereigns, regions and agencies are gaining access to ever more diverse pools of liquidity — including conservative investors in long tenors — as yields hit historic lows and spreads scream in towards the core. But even more fuel could be added to the rocket powered rally, as growing tensions in Ukraine force investors to jettison emerging market debt and snap up the periphery’s paper.

Peripheral eurozone sovereigns, regions and agencies are gaining access to ever more diverse pools of liquidity — including conservative investors in long tenors — as yields hit historic lows and spreads scream in towards the core. But even more fuel could be added to the rocket powered rally, as growing tensions in Ukraine force investors to jettison emerging market debt and snap up the periphery’s paper.

Mexican microfinance company Crédito Real may make a second attempt at an international bond issue as a part of a liability management exercise, but LatAm banks remain starved of supply despite claiming conditions are ripe for a blue chip issuer to lift issuance volumes.

Pent-up demand for additional tier one debt should ensure a warm reception next week for planned deals from Santander and Danske Bank. Both banks are planning to sell euro-denominated AT1 debt after roadshowing their deals early next week, and investors are primed to gobble the paper down.

A strong US investment grade market is a sign to top-rated Latin American corporates that they can reopen bond issuance, say senior LatAm bankers.

BP continued a busy month of bond issuance today with a €2bn issue, which echoed in scale the €2.5bn dual trancher it sold in February 2012.