UniCredit

BBVA is the latest large European bank to have suffered a ratings downgrade during the Covid-19 pandemic, with Fitch having moved the issuer’s debt ratings down by a notch blaming a weaker operating environment in Mexico and Spain.

UniCredit opened books on Tuesday for what could be its last capital transaction of the year. The bank favoured the dollar market for its new tier two, having sold a senior transaction in euros only last week.

Europe’s high grade corporate bond market has started the week on the front foot, with a mixture of deal types for investors to snap up including a rare chance to grab yield on a green bond.

Gunvor, the Swiss commodity trader, has signed a €450m sustainability-linked facility, pushing its environmental, social and governance-linked bank lines signed this year up to almost €1.1bn-equivalent.

Five banks and insurers from across Europe issued senior debt this week, including two in green bond format, as they tried to find opportunities in a choppy market. Athene Global Funding, Banco de Sabadell, Virgin Money, Santander and Hypo Noe all priced deals.

DZ Hyp managed to attract a healthy order book for a €1bn eight year deal issued on Wednesday, a day before a more narrowly subscribed €1bn 10 year from UniCredit’s German subsidiary, HVB.

Deals issued on Thursday by SR Boligkreditt and UniCredit Germany (HVB) illustrated that investor demand is skewed to bonds that offer a pick-up, no matter how small.

Green bonds made up the majority of the supply in the euro bank bond market on Thursday, with Hypo Noe and Santander capitalising on strong demand for the asset class.

It was another scorching day in Europe’s high grade market on Wednesday following further central bank-created exuberance, as investors piled more than €55bn of orders into deals from across the spectrum of ratings and sectors.

The European Investment Bank and the State of Brandenburg have mandated banks to bring euro deals on Thursday, in what has been an extremely thin week for supply with issuers well funded and some weakness in secondaries.

Sovereign, supranational and agency bond issuers are mobilising their resources to support the fight against Covid-19. The below table details the bonds they have issued, specifically in response to the coronavirus pandemic.

Transition bonds were the hot idea of 2019 in green finance circles, appearing to offer a way to expand themed bonds to a much wider range of issuers. But the product has struggled to gain momentum. This week’s deal from Snam, the Italian gas grid company, confirmed that it has an audience, among both issuers and investors.