Portugal

Portugal printed its first new long dated benchmark since September 2014, drawing the week’s largest order book in the public sector bond market for its 15 year deal.

Despite the political risk surrounding the formation of the Italian government, one asset manager believes its debt is better value than that of some of its peers in the peripheral Europe.

A trio of euro borrowers picked up a combined €8.5bn on Tuesday, seemingly without testing the limits of demand in the market.

Rating: Ba1/BBB-/BBB

Italy and Portugal showed this week that any concerns about the pace of eurozone quantitative easing halving to €30bn from January were overdone as they each built their largest ever benchmark books. Italy’s trade was particularly notable, as it was the last syndication by its retiring head of funding — and market stalwart — Maria Cannata.

French toll road operator Autoroutes du Sud de la France on Wednesday followed the path its compatriot Orange had taken on Tuesday by issuing a €1bn 12 year bond, while Deutsche Bahn and Ren Finance on Thursday opted for the 10 year area of the curve. Investors appear keen to put their money to work at the longer end of the corporate bond curve.

State owned German rail operator Deutsche Bahn steamed back into the investment grade corporate bond market on Thursday, choosing an unusual maturity that was still well received by investors. The same applied to Ren Finance, which brought a sub-benchmark 10 year deal following a roadshow earlier in the week.

A combined €48bn of cash swelled the orderbooks for Italy and Portugal’s deals on Wednesday, dispelling any fears that the reduction of the European Central Bank’s quantitative easing programme would hamper demand.

January’s impressive pipeline of sovereign issuance is starting to unload, as Italy and Portugal hit screens on Tuesday for their first syndications of the year.

Investment grade corporate bond market players only had to wait one day for the first new deals of 2018. Renault and BMW both brought new paper to market on Wednesday, selling a total of €2.75bn of bonds with little premium.

A long-standing dispute about how the Bank of Portugal handled the senior bonds of Novo Banco in 2015 reared its head again this week, as a group of influential asset managers refused to take part in a subordinated bond issue from Banco Comercial Português (BCP). But the boycott is yet to damage Portuguese financial institutions, with banks gradually restoring their access to the capital markets, writes Tyler Davies.

Banco Comercial Português (BCP) found plenty of demand for its first ever tier two deal on Wednesday, even though a number of investment funds made it clear that they would not invest in Portuguese debt until the Bank of Portugal addressed the way it handled Novo Banco in 2015.