Spain

Spain’s construction and energy company Abengoa on Monday announced an unexpected €650m capital raise, which triggered immediate selling in its shares and bonds.

Covered bond new issue premiums fell this week as six issuers raised a collective €5.5bn in three currencies with total demand of almost €8bn.

The secondary market is no longer a relevant tool for covered bond price discovery, say bankers, as spreads have come only to reflect the level at which the eurosystem will buy bonds rather than regular investors.

Spain’s Banco Santander on Thursday announced a 24% surge in first half profits as revenues grew and provisions shrank in its far-flung retail network, although its wholesale banking unit turned in a roughly flat performance.

Covered bond new issue premiums fell on Tuesday as four borrowers launched deals worth over €2.5bn in total, on collective demand of about €5bn. LBBW’s second deal of the month was priced 1bp tighter than its last bond, even though it was two years longer. Bankia was set to issue at less than half the concession paid by peripheral borrowers last week, while Bank of Montreal and Bank of Nova Scotia were set to price in line with recent Canadian predecessors.

Zegona Communications, an Aim-listed operating company set up to buy, fix and sell European telecoms firms, is acquiring the entirety of Telecable de Asturias for €369m.

Rating: B2/-/BB

Two periphery banks this week made clear that their market is back in business. Like the wider FIG market, the periphery had been closed since early June. There is room, albeit temporarily, for more, writes Virginia Furness.

The primary market for peripheral European covered bonds leapt back to life this week after a 12 week hiatus, with investors queuing up to buy a series of deals that emerged in quick succession.

Spain’s Instituto de Crédito Oficial has raised over $100m equivalent with a private medium term note in Brazilian reais, and is keen to print more MTNs in the currency.

Bankinter has priced the fourth peripheral covered bond of the week, the longest from a peripheral issuer since mid-April, and the most oversubscribed in the seven year tenor since early March. The evident success removes any lingering doubt over peripheral banks’ access to capital markets following the re-emergence of the Greek debt crisis.

Spain’s three month borrowing costs dipped back into negative territory and to a record low on Tuesday, as the eurozone periphery enjoyed a strong run of trading before Portuguese auctions later this week.