Santander

The controversial liquidation of two Venetian banks at the weekend made one thing very clear for investors — resolution authorities have no appetite for bailing in senior bondholders. But the asset class is finally getting ready for its big makeover in Europe, and the level of risk involved in holding the new look instruments remains far from clear, writes Tyler Davies.

On Wednesday, Heathrow returned to the euro bond market for the first time in over two years, with rates volatility providing a turbulent backdrop for the deal.

Polish utility company Tauron Polska Energia moved pricing 17bp on Wednesday to raise €500m with a 10 year note, despite a large sell-off in Bunds on Tuesday.

Argentina’s largest private energy company Pampa Energía wrapped up investor meetings with a lunch in New York on Wednesday but is yet to issue initial price thoughts on a planned fixed rate peso-linked international bond.

On Wednesday, Heathrow returned to the euro bond market for the first time for over two years. The UK airport company printed a €500m 15 year deal, following the lead of Daimler and Gecina earlier in the week.

So far this week, euro corporate bond investors have had to choose between three tranches from an individual issuer. On Wednesday, they had a choice of three issuers, with different ratings and offering different tenors.

Strong support from IG accounts had enabled Polish utility company Tauron Polska Energia to tighten guidance to 165bp, plus or minus 2bp, for its windy but not green 10 year note on Tuesday morning.

Euro conditions are excellent for public sector borrowers, with Spain pulling in a nearly €30bn book for an €8bn 10 year — which bankers away from the trade said indicated a high presence of quality investors — and KfW raising €5bn after picking a seven year deal over a shorter tenor. Another pair of issuers are now looking to take advantage.

The euro market for public sector borrowers looks set to kick back into action after a quiet last week, with a pair of big borrowers mandating for trades to come on Tuesday.

Most new bond issues in Europe this week have been multi-tranche offerings, with issuers benefitting from investor appetite to buy longer tenors for greater returns. Safran, however, bucked that trend with a pair of short dated floating rate notes.

On Wednesday BP became the third UK issuer to sell bonds in euros this week. The €1.5bn dual tranche deal followed oil entering bear market territory on Tuesday.

Chile re-opened its domestic 2021s and 2035s on Wednesday as it looks to attract more international investors into its peso-denominated bonds.