Portugal

A vote for the UK to exit the European Union next week is likely to intensely magnify a strong rush into safe haven assets, but some bankers are still confident that after the initial furore of a ‘Brexit’ there could be room for issuers eyeing euro deals in July to go ahead. And, if the UK opts to stay in the EU, issuers are likely to be lining up to print in July.

Falling government bond yields across Europe have meant investors have been rewarded with impressive returns so far this year. One country however, continues to lag. Portugal has seen its credit risk hover at elevated levels and its government bonds have produced negative returns this year.

Credit Suisse has hired Jerome Renard from Nomura as a managing director in equity capital markets. Renard has broad experience, but taking into account his French nationality and experience in Iberia, he will principally cover those markets.

Portuguese covered bonds were steady on Friday following news that a Portuguese court had granted a provisional injunction against Bank of Portugal (BdP), and following a concern raised on Monday by Moody’s that Portuguese covered bond holders could lose their priority claim. The news emerges as DBRS decides on Friday whether to maintain its investment grade rating on Portugal, without which government bonds would not qualify for the ECB’s purchase programme.

Portugal brought a dual tranche syndicated tap this week, in what some bankers felt was a disappointment amid a busy market where every other deal went well — but the leads were quick to defend the trade.

Rating: Ba1/BB+/BB+

Portugal breathed some liquidity into a pair of outstanding bonds on Wednesday with its first syndication since January, achieving much lower premiums than its last syndication, according to bankers.

Public sector borrowers have peppered the dollar and euro curves with deals this week, amid a government bond rally that is helping 10 year Bund yields flirt with record lows and the equivalent US Treasury rate near its lowest point in 2016.

Portugal is lining up for its first test of the syndication market since the European Central Bank announced its latest round of monetary easing measures a month ago — measures that have had less effect on Portugal than its periphery peers.

Portugal cut its funding costs at a bond auction and Italy lined up for a sale on Wednesday, as European Central Bank support protected eurozone periphery government bonds from any knock-on effects from a terrorist attack in Brussels on Tuesday.

After a string of strong syndications and auctions from the eurozone periphery during the last seven days, issuers from the region could be set to enjoy even lower yields thanks to the latest monetary stimulus package from the European Central Bank.

Public sector borrowers from the eurozone periphery are preparing a flurry of issuance in the next few days, with one still smarting from a change to its rating outlook late last week.