Santander

Foreign and domestic banks flocked to the UK this week as they sought to take advantage of stellar funding conditions in the sterling market. Bankers said this was the first chance issuers had to benefit from opportunities in the currency following December’s general election, which removed a lot of short-term uncertainty around Brexit.

Crossover credit Cellnex, the Spanish mobile phone mast owner, offered investment grade bond investors the chance to pick up some spread on Thursday, while unrated Air France-KLM waits in the wings.

Green corporate bond investors had plenty to sink their teeth into on Thursday, with electric utlities E.On bringing three tranches and Red Electrica making its debut in the format.

ABN Amro and Deutsche Bank opened books on new senior deals in the sterling bond market, with bankers recognising that the currency is 'working very well' for international names.

Danske Mortgage Bank, Santander UK, Raiffeisenlandesbank Hypothekenpfandbrief and UniCredit Bank AG were marketing covered bonds on Wednesday, steering well clear of negative yields by tapping into healthy demand for long dated assets.

Santander’s Chilean arm on Tuesday joined the early wave of dollar issuers from the country, pricing a $750m five senior unsecured bond 2bp inside where state-owned Banco del Estado de Chile sold an identical trade a day earlier.

Air France KLM has mandated banks for a five year euro bond. The appearance of an unrated issuer so early in the year is being seen as a sign of the market’s strength.

Nationwide Building Society issued the first sterling covered bond of the year on Friday, without needing to pay any premium over the tight trading levels of its existing bonds.

Southpaw takes a sideways look at some of the big events that defined investment banking in 2019.

The Bank of England said it will increase the countercyclical buffer by 100bp for UK banks after disclosing the results of its latest stress test this week. As the sector performed well in the test, the new capital requirements are being interpreted as a ‘Brexit buffer’ to help institutions withstand the risk of economic turmoil at the end of 2020.

European banks no longer really have to think about building up layers of additional tier one debt. All of the focus has shifted to managing and refreshing this capital layer, and taking full advantage of a ferocious hunt for yield. Tyler Davies reports

Activity is set to heat up in the additional tier one (AT1) bond market in 2020, with as many as 22 bonds approaching their first call dates. Market participants appear confident that conditions will allow banks to refinance and incentivise them to do so.