Spain

BBVA on Wednesday became the first European financial institution to launch a bond in the euro market to tackle Covid-19, unravelling the appetite for these type of bonds while undergoing a refinancing exercise.

Spain’s economy ministry has announced an update to the sovereign’s 2020 funding programme, which will see it borrow much more than initially announced as it tackles the pandemic.

European banks are expected to hit the dollar market in force over the coming weeks as they look to take advantage of an extended rally in spreads.

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, May 11. The source for secondary trading levels is ICE Data Services.

Instituto de Crédito Oficial (Ico) was almost seven times covered for its four year Covid-19 social bond on Wednesday, as investors continue to support deals to tackle the pandemic. The European Stability Mechanism could follow with a similar maturity next week, after it sent banks a request for proposals (RFP).

Instituto de Crédito Oficial (Ico) is holding a series of investor calls to introduce its updated social bond framework ahead of a transaction which will be specifically used to target the effects of the coronavirus pandemic.

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, May 4. The source for secondary trading levels is ICE Data Services.

Prospects are rising of a return to normal merger and acquisition activity, despite the continued grip of the Covid-19 pandemic. Telefónica, the Spanish telecoms group, has confirmed it is in talks about combining its UK mobile business O2 with Virgin Media, the quad play telecoms firm owned by Liberty Global.

Banco Santander and Rabobank led senior bond supply in Europe this week, both issuing well-received non-preferred deals while Crédit Mutuel Arkéa went for the preferred format. National champions and other strong banks are lining up to issue while market conditions are conducive for deals, but lesser credits remain on the sidelines.

Rating: Baa1/A-/BBB

The European Investment Bank and the Region of Madrid stood out in the public sector bond market this week, with the former achieving its biggest ever order book for a euro benchmark.

The funding needs of Spain’s regions are expected to rise this year. The coronavirus pandemic is stretching healthcare resources, which are funded at a regional level, and will require financing, according to debt capital markets bankers.