Spain

Spain and SNCF SA announced new euro benchmarks with 20 year maturities on Monday, following the European Investment Bank’s record-breaking effort in the tenor last Friday.

After the global eruption of the coronavirus pandemic, issuers such as governments, central banks and companies have been prompted to create new strategies to tackle the negative effects. Banks have also recently begun issuing labelled bonds linked ot their Covid responses.

The Spanish treasury has invited investors to join a call on Friday to discuss the sovereign’s recently updated funding programme for the year.

Mitsubishi UFJ Financial Group (MUFG) has become the second bank to issue a Covid-19 bond in the euro market following the example set by BBVA in May.

Spanish house prices fell for the first time in four years in the first quarter this year, but even so, the Cédulas market is in a much stronger position to weather further expected falls than it was when house prices dove in 2007 and 2012. And based on the recent performance, even if spreads were to widen, some investors would be likely to consider the move as an opportunity to buy.

Iberdrola attracted robust demand for a €249m tap of its outstanding equity neutral convertible bonds due in 2022.

BBVA surprised market participants by becoming the first bank to issue a Covid-19 response bond in Europe this week. There will be follow-on deals as the format catches on in credit markets — high grade corporates are looking to do deals too — but it is unlikely to be exploited as widely as it has been in the SSA market. David Freitas and Mike Turner report.

Rating: A3/A/A-

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.