Spanish Sovereign

Finland returned to the sterling bond market on Wednesday with its first new deal in over a year. It came hot on the heels of Instituto de Crédito Oficial, which on Tuesday sold its first new issue in the currency in five years.

A fire in its largest factory in Spain has led meat processor Campofrio to abandon plans to issue a bond to refinance senior unsecured notes maturing in 2016.

Fomento de Construcciones y Contratas, the Spanish building and environmental services company, is close to reaching agreement with its creditors on a debt restructuring, according to a spokesman for the company.

Abengoa’s shares and bonds have bounced back this week, after their dizzying falls at the end of last week, when investors were alarmed that the Spanish renewable energy company had classified its recent green bond issue as non-recourse debt. But the securities are not right back to their previous levels, suggesting concerns linger about the company.

Santander returned to covered bonds this week with its first deal in nearly two years which, by virtue of its sheer size and duration, was remarkable. The two tranche deal included a 20 year piece that has not been seen in covered bonds for seven years. This was targeted to asset managers and insurers in the private sector — in sharp contrast to many other deals such as a €250m four year tap from LBBW that the Bundesbank mostly bought. The trades rammed home the distortion the European Central Bank's purchase programme (CBPP3) is causing the covered bond market which market makers said had potential to cause considerable mark to market pain.

Spain's Gas Natural issued its first hybrid capital bond on Wednesday, raising €1bn, after a two day roadshow.

Gas Natural Fenosa, the Spanish gas and electricity company, is expected to launch its first hybrid capital issue as early as tomorrow (Wednesday).

Abengoa Yield, the contracted asset holding company controlled by Abengoa, the Spanish renewable energy company, has launched its first bond since it was listed on Nasdaq in June.

Spain screwed down its 10 year borrowing costs at an auction on Thursday, but was still a few basis points off the 2014 low it hit in early October. But the sale — which included three year and nine year debt — sparked strong demand and took it within touching distance of its funding target for the year.

Italian power utility firm Enel is set to sell part of its stake in Spanish peer Endesa for up to about €3.4bn, through an underwritten secondary public placement.

Santander has built on a strong showing in the European Central Bank’s comprehensive assessment with an impressive set of third quarter results, which included a big rise in earnings for its UK unit and investment bank.

The European Central Bank’s covered bond purchase programme entered a new phase this week as eurozone issuance enabled it to buy the primary market, rather than relying on secondary where supply is drying up. Its buying is good news for peripheral banks but may cause investors to desert the core.