UK

UK mortgage lender Together Financial was the only new deal in the European high yield bond market of the week when, on Wednesday, it sold a sterling offering that received firm demand in a rare example of a single-B name opting for bonds over leveraged loans.

Arrow Global, the UK distressed debt buyer, had its ratings upgraded by Moody’s on Tuesday to Ba3, increasing the market’s overall stock of bonds with double-B ratings — a stock which some investors believe is excessive.

UK-based sterling issuers should get into the market soon, said investors this week, as the double threat of tricky Brexit negotiations and the Bank of England wrapping up its corporate purchase programme threatens to hit the market hard in the coming months.

Bankers and investors believe Europe’s election schedule will drive up rates on new high yield bonds and increase the attraction of leveraged loans to issuers — even as Together Financial’s new sterling offering kept the market alive.

Swiss petrochemicals firm Ineos priced a €4.5bn-equivalent four tranche term facility refinancing at the tight end of guidance on Monday, taking advantage of a leveraged loan market where abundant demand and scarce new paper is grinding down margins and encouraging a wave of refinancings.

The Co-operative Bank put itself up for sale on Monday, but the ailing UK lender is also considering another debt-for-equity swap to build capital and avoid intervention from the Bank of England.

Shares in DFS Furniture, the UK sofa retailer, rose 4.2% on Friday after its private equity owner Advent International sold its last shares in the company for £58.5m after the expiry of a lock-up and the release of DFS’s first half results earlier in the day.

While all eyes are focused on the Brexit process, the Bank of England (BoE) has quietly begun publishing numbers that support London's claim to be the leading RMB hubs in Europe. Meanwhile, market participants continue debate the relevance of the upcoming China-London Connect scheme.

Rating: A1/ A+/—

Shares in RPC Group, the UK plastic packaging maker, closed 5.8% lower on Thursday after it announced a fully underwritten £552m rights issue to finance its takeover of Letica, a US rival.

BP Capital Markets brought a £400m bond to the market on Thursday that was priced in line with initial price thoughts, causing disagreement between bankers on and off the execution about where marketing levels should have started.

The French bank’s recent changes to its equity capital markets division show it is serious about growing its European ECM business outside France, writes David Rothnie.