Santander

Two more dual tranche bond deals were priced in euros on Wednesday. BP followed a similar path to previous issues this week, printing eight year and 12 year tranches. However Safran, the French defence company, printed two year and four year floating rate notes.

The euro corporate bond market started the week on the front foot after French president Emmanuel Macron’s party won the first round of parliamentary elections on Sunday and set up a likely landslide win in the National Assembly vote on June 18.

Covered bond supply is expected to remain active as borrowers are planning strategic deals ahead of the half year end. Leeds Building Society is the latest issuer to add its name to the pipeline.

Argentine candy maker Arcor is looking to tap its existing dollar-denominated 2023s as soon as Tuesday after mandating the same three banks that ran its original bond issue to manage the deal.

Banco Popular’s resolution has set a precedent, and it’s a good one.

Guarantor: Kingdom of Spain

Public sector issuers from the eurozone periphery this week drew big books on deals that later tightened in secondary trading, as expectations that Italy could be added to the long list of European elections this year failed to deter investors.

The contingent convertible (CoCo) bank capital market received all the plaudits on Wednesday, when Banco Popular Español was forced into a “rescue” by Santander.

Many equity market participants thought the wave of big European bank recapitalisations was beginning to wind down, until Santander surprised the market on Wednesday by announcing a €7bn rights issue to recapitalise Banco Popular, its failed domestic rival, after agreeing with European regulators to buy the bank for €1.

European authorities applied the bank recovery and resolution directive (BRRD) for the first time on Wednesday, placing Spain’s Banco Popular into resolution and approving its sale to Santander. The regulatory process, in which additional tier one (AT1) and tier two bonds were wiped out, has far ranging implications for all market participants working on financial debt.

With the Credit Suisse rights issue closing this week and the completion of cash calls by Deutsche Bank, UniCredit and Millennium BCP earlier in the year, the latest wave of big bank recapitalisations looked like it was drawing to a close, until dramatic news on Wednesday this week.

A pair of eurozone periphery SSAs are tackling opposite ends of the euro curve this week. Italy will launch a 30 year benchmark on Wednesday, while a Spanish agency drew a doubly subscribed book for a three year.