NordLB

The Federal State of Lower Saxony sold the first euro public sector benchmark of 2020 with a well received 10 year deal on Thursday. Meanwhile, the European Investment Bank is keeping to tradition of beginning its benchmark funding for the year in sterling.

Covered bonds performed well in 2019, but yields finished in negative territory and spreads ended at their tightest for the year. The implication is that, despite higher than expected ECB covered bond purchases and a renewal of its ultra-cheap TLTRO facility, investors will struggle to match 2019’s returns in 2020, writes Bill Thornhill.

The European Commission will allow a group of public institutions in Germany to inject €2.8bn of capital into the troubled German lender NordLB, after finding that its recapitalisation plans conformed to EU rules on state aid.

Corporate bond investors in Europe have enjoyed an “exceptional” year, according to analysts at one bank, with significant spread tightening in all sectors, even though negative yields have become increasingly common again.

Intesa Sanpaolo and BNP Paribas hurried to make use of strong market conditions this week, building blowout order books for a pair of new senior deals in socially responsible formats.

BBVA and DNB Bank were both looking to build towards their minimum requirements for own funds and eligible liabilities (MREL) in the euro market on Thursday, eschewing non-preferred senior issuance in favour of the cheaper preferred senior format.

The European Union sent round a request for proposals (RFP) on Tuesday to dealers ahead of a €150m 15 year trade, following on from the EU’s €20m return to the MTN market last month.

Caixa Economica Montepio Geral (Montepio) mandated leads for the second Portuguese covered bond of the year on Tuesday, and NordLB Luxembourg has signaled its intention to press ahead with its debut renewable energy covered bond following a roadshow.

The short end of the euro curve is becoming the new sweet spot for public sector borrowers, according to SSA bankers, despite the deeply negative yields in these maturities. The European Stability Mechanism (ESM), Instituto de Crédito Oficial (Ico) and Investitionsbank Berlin (IBB) are all enjoying strong outings with three or five year tenors this week.

JP Morgan changes line-up for energy and utilities, multi-nationals, UK ECM and UK M&A — UniCredit swaps out CEE investment bank head — Pigasse exits Lazard

Instituto de Crédito Oficial (Ico) and Investitionsbank Berlin (IBB) found strong demand in the short end of the euro curve on Wednesday, which SSA bankers are calling the new sweet spot, despite the deeply negative yields.

NordLB has promoted a public sector fixed income analyst to its origination desk, covering supranationals and agencies.