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Market participants are debating whether the risks to additional tier one coupons have risen or fallen after the European Central Bank urged banks not to pay equity dividends for at least six months.

Bank of America reopened the market for financial institution bonds in euros this week and was followed by a slew of other deals as investors welcomed wider spreads and new issue concessions.

New senior bank bonds are proving attractive to investors at about 40bp-50bp or more over secondary levels, with UK issuers Lloyds and HSBC joining US peers in returning to the new issue market this week.

European banks are steering well clear of new issue markets during the coronavirus pandemic, avoiding having to call on investors for funding by taking advantage of attractive central bank funding schemes.

Could EU member states finally come together to issue a common debt instrument? In this article, GlobalCapital takes a look at the key issues.

FIG DCM officials say it is impossible to tell when banks could return to selling unsecured debt, with markets locked in a period of extreme volatility and uncertainty.

The European Central Bank failed to cheer bank debt investors with a stimulus package at the end of a difficult week that saw credit spreads soar. However, some analysts think that the ECB offered more than was immediately apparent, with its moves amounting to €800bn of capital relief.

Spreads on bank bonds were sent shooting wider again on Thursday, caught up in further negative news around the Covid-19. But market participants are still unsure about how much of impact the pandemic will have on bank credit quality, with the sector already facing pressures over profitability.

Volatility in the financial institutions bond market drove spreads even wider on Monday as a crash in the price of oil added to fears over the extent of the coronavirus outbreak. It was enough to close the primary bond market for the foreseeable future, said market participants.

Relx, the UK specialist publisher, reopened the European corporate bond market on Tuesday after more than a week without any benchmark issuance. It was a convincing €2bn issue, but Relx had to pay double digit new issue premiums.

Conditions are changing so fast with the coronavirus epidemic that each day could bring a change in sentiment, but for the time being leveraged finance is staying calm and continuing to function. There is more activity in this high risk corner of Europe’s capital markets than in any other, apart from sovereign, supranational and agency bonds.

Paccar Financial, the leasing arm of Paccar, the US maker of DAF, Kenworth and Peterbilt trucks, braved the European market on Wednesday to print a sub-benchmark sized bond, as syndicate officials said the market could move wider.