Spain

European banks are looking to tie up loose ends in their 2020 funding plans in next couple of weeks, according to deal arrangers, as they get ready for a remarkably uncertain summer period. Tyler Davies reports.

CaixaBank attracted plenty of demand for its first Covid-19 bond on Wednesday, printing a €1bn deal at a spread that was through the fair value implied by its outstanding securities.

A worsening in credit conditions has squeezed some borrowers across EMEA out of syndicated loans and into the bilateral market. As syndicated loans bankers face another year of disappointing figures, market players are split over whether this trend will leave a more permanent dent in volumes. Mariam Meskin and Jon Hay report.

BBVA is the latest large European bank to have suffered a ratings downgrade during the Covid-19 pandemic, with Fitch having moved the issuer’s debt ratings down by a notch blaming a weaker operating environment in Mexico and Spain.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, June 22. The source for secondary trading levels is ICE Data Services.

Green bonds made up the majority of the supply in the euro bank bond market on Thursday, with Hypo Noe and Santander capitalising on strong demand for the asset class.

Banco de Sabadell proved very popular with a short-dated euro senior deal this week, after issuing in an unusual three year non-call two maturity structure.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, June 15. The source for secondary trading levels is ICE Data Services.

BBVA is expected to take advantage of recent changes to Pillar 2 requirements with a greater proportion of senior preferred issuance but it has a modest need for subordinated issuance. The Spanish national champion also plans to make use of its Targeted Longer-Term Refinancing Operation (TLTRO) allotment from the ECB, which has been substantially increased.

Rating: A/A/A-

Market participants expect European banks to take a large chunk of funding through the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO III) programme, hitting covered bond supply levels. But issuance in other asset classes should remain unaffected as banks follow through with their funding plans.

There were no issues of competing supply on Tuesday as three eurozone sovereigns amassed big order books, buoyed by last week’s expansion of the Pandemic Emergency Purchase Programme (Pepp).