Spain

Mitsubishi UFJ Financial Group (MUFG) has become the second bank to issue a Covid-19 bond in the euro market following the example set by BBVA in May.

Spanish house prices fell for the first time in four years in the first quarter this year, but even so, the Cédulas market is in a much stronger position to weather further expected falls than it was when house prices dove in 2007 and 2012. And based on the recent performance, even if spreads were to widen, some investors would be likely to consider the move as an opportunity to buy.

Iberdrola attracted robust demand for a €249m tap of its outstanding equity neutral convertible bonds due in 2022.

BBVA surprised market participants by becoming the first bank to issue a Covid-19 response bond in Europe this week. There will be follow-on deals as the format catches on in credit markets — high grade corporates are looking to do deals too — but it is unlikely to be exploited as widely as it has been in the SSA market. David Freitas and Mike Turner report.

Rating: A3/A/A-

BBVA on Wednesday became the first European financial institution to launch a bond in the euro market to tackle Covid-19, unravelling the appetite for these type of bonds while undergoing a refinancing exercise.

Spain’s economy ministry has announced an update to the sovereign’s 2020 funding programme, which will see it borrow much more than initially announced as it tackles the pandemic.

European banks are expected to hit the dollar market in force over the coming weeks as they look to take advantage of an extended rally in spreads.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, May 11. The source for secondary trading levels is ICE Data Services.

Instituto de Crédito Oficial (Ico) was almost seven times covered for its four year Covid-19 social bond on Wednesday, as investors continue to support deals to tackle the pandemic. The European Stability Mechanism could follow with a similar maturity next week, after it sent banks a request for proposals (RFP).

Instituto de Crédito Oficial (Ico) is holding a series of investor calls to introduce its updated social bond framework ahead of a transaction which will be specifically used to target the effects of the coronavirus pandemic.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, May 4. The source for secondary trading levels is ICE Data Services.