UK

More companies will raise equity capital without first offering existing shareholders pre-emption rights, given the "unprecedented" economic damage being caused by the spread of Covid-19.

Market participants are debating whether the risks to additional tier one coupons have risen or fallen after the European Central Bank urged banks not to pay equity dividends for at least six months.

The Covid-19 pandemic is forcing many of Europe's sovereigns to expand their borrowing programmes. This week's funding scorecard looks at the changes European sovereigns have made to respond to the crisis, and the progress they have made in their funding programmes as we approach the end of the first quarter.

Market participants are already questioning the legitimacy of new ‘expected loss’ accounting rules, with the eurozone, the UK and the US having all now softened the application of their standards for banks during the coronavirus crisis.

Standard Chartered is forming a new financing and securities services unit that will combine securities services, which currently operates within transaction banking, with portfolio risk management in the financial markets business.

Bank of America reopened the market for financial institution bonds in euros this week and was followed by a slew of other deals as investors welcomed wider spreads and new issue concessions.

The coronavirus crisis has made it difficult for banks to know how much wholesale funding they will need in the coming years. But when a window opened in the primary market this week, issuers showed that they are still focused on trying to build up their levels of total loss-absorbing capacity (TLAC), write Tyler Davies, David Freitas and Bill Thornhill.

European corporates facing months of operational lockdown in the face of the coronavirus pandemic are turning to equity capital markets to secure their survival. But they need to be quick about it with markets so volatile, meaning banks are exploring how to get them in and out of the market without putting them through the long, arduous process of a rights issue.

The volume of new euro senior debt sold by banks has hit €10bn this week, following deals from Barclays, Credit Suisse and NatWest Markets on Thursday. Yield and spread levels remain high, but market participants have been delighted to see investors throwing their confidence behind new transactions in the middle of the coronavirus crisis.

UK chemicals firm Johnson Matthey is looking for a target of $300m US private placement funding, with arrangers more confident of selling dollar debt than euro or sterling flavours.

Banks took advantage of a huge rally in UK equities on Tuesday to launch a placing in SSP, a UK food outlet operator, in order to give it the cash required to strengthen its balance sheet, working capital and liquidity position because of disruption caused by Covid-19.

New senior bank bonds are proving attractive to investors at about 40bp-50bp or more over secondary levels, with UK issuers Lloyds and HSBC joining US peers in returning to the new issue market this week.