Comment EM and The Cover

‘Corona bonds’ have been talked up so much that the EU risks underwhelming the market by failing to act. It has become a question of political solidarity within the region, not simply one of debt management.

“There are decades when nothing happens; and there are weeks when decades happen.” So said Vladimir Lenin, although the founder of Soviet Russia probably didn’t write this with the capital markets in mind.

As the coronavirus advances deeper into the US and northern Europe, capital markets have had one of their most shocking and arduous weeks for many years.

Banks are going to play an outsized role in softening the economic impact of Covid-19 in the euro area.

China has launched a streamlined system for corporate bond issuance. The move should be applauded — but it further muddies the waters in China’s regulatory system, writes Rebecca Feng.

The shock of the Covid-19 coronavirus outbreak has forced some rapid thinking among capital markets participants. Almost the first impact has been on travel.

Market participants should be braced for political volatility as the world comes close to experiencing a pandemic.

BMW sold an ultra-cheap auto loan securitization in China last week, giving a clear demonstration of investor appetite for highly-rated credits despite the coronavirus epidemic. But other auto financing companies (AFCs) should be realistic about their chances of repeating this success, as liquidity is drying up quickly.

The Single Resolution Board is planning to add another level of intricacy to the minimum requirement for own funds and eligible liabilities (MREL), just as it seemed as though they couldn’t get any more complicated.

Sustainable finance players are enthusiastic about regulation, which they expect to bring clarity and order to the market. It may — though when the new EU rules are implemented they are likely to irk participants more than they expect. But what would be really effective are direct actions that bypass finance.

Hybrid capital bonds are the flavour of the month. Their roaring success this week and the absence of any clear event that will knock them off their perch means they will quite likely prove the flavour of the year.

Conditions for issuance in the additional tier one market may be more attractive than ever, but there’s still good reason for some bank treasury teams to bide their time.