Société Générale

'We are all in this together' is not a view Europe’s investment banks will recognise when they compare themselves with their formidable US rivals, writes David Rothnie.

Chunky books and shrinking new issue premiums were everywhere in Europe's high grade corporate bond market on Tuesday, as some investors said the market felt like it had found solid ground again after huge moves in recent weeks.

Ireland impressed on-looking supranational, sovereign and agency bond bankers on Tuesday as it received its largest ever order book for a syndication. It was not the only eurozone sovereign in the market as Cyprus printed seven and 30 year bonds.

Sanofi, the French pharmaceutical company, followed the example of Danaher by reopening bonds that priced in the last few weeks. It raised another €500m on Monday, pricing well inside where it priced the original bonds at the end of March.

Eurozone sovereigns extend their syndication spree this week with Cyprus and Ireland mandating banks for new deals on Monday. Both sovereigns are preparing bigger funding programmes in response to the coronavirus pandemic.

The corporate bond market made a blazing start to Monday with deals for Repsol, Naturgy and LafargeHolcim on screens, as issuers cram what they can into a shortened week.

High grade companies poured into the bond market this week as participants weigh up whether this is a redux of 2009’s record year or if the unprecedented central bank spending and high bank liquidity mean that this is a unique market where borrowers raise cash even if they do not really need it.

Oil firms burst into the corporate bond market on Thursday with BP, Royal Dutch Shell and OMV opening books on multi-tranche trades, as comments from US president Donald Trump sent oil prices rocketing.

The power of central bank buying and fund redemptions are evident this week in the European investment grade corporate bond market, where issuers have been squeezed into a narrow range of maturities as they search for cash.

Extraordinary times call for extraordinary capital markets activity. The North American corporate bond market funded a staggering record $194bn of investment grade issues in March while Europe has also been busy — shaking up the league tables and yielding a surprise windfall for the very largest investment banks.

The primary corporate bond market in Europe threw up another blistering day on Wednesday, with seven issuers on screens by mid-morning, bringing the number of deals so far this week to 18, though bond syndicate desks are hesitant to compare this crisis market with the record-breaking issuance in 2009.

Some of the largest financial institutions in the eurozone have yet to cancel or postpone their dividend distributions for this year, despite explicit guidance from the European Central Bank urging them to restrict payouts during the coronavirus crisis.