The European Union could become the biggest global issuer of green bonds – and the size of the market could nearly double in a short time – if it pushes ahead with a proposal to finance 30% of its €750bn post-pandemic recovery fund with green bonds, according to a report by ratings agency S&P.

An additional €225bn in issuance would boost the size of the global green bond market by 89% compared with 2019, help to create a green pricing curve and boost the euro’s status as a green reserve currency.

"It would be a game changer for the EU to issue €225bn of green bonds," said Marion Amiot, a senior European economist at S&P.

European Council President Charles Michel’s proposal to have 30% of the "Next Generation EU" €750bn fiscal plan target climate-friendly assets is a significant increase on €7.5bn of fresh money announced in the EU’s Green Deal. S&P described it as a "huge improvement".

It would make the EU the main issuer of long-duration...

Issuance of US private-label mortgage-backed securities may end up getting only a small bump even as record-low mortgage rates are expected to spur home buying and refinancing.

Last week, interest rates on 30-year fixed-rate mortgages fell to 2.98% - their lowest levels on record going back nearly 50 years, Freddie Mac said.

Even so, rock-bottom borrowing costs are expected to make only a small impact on primary issuance of private label-deals, which have only just made a modest recovery after grinding to a halt for two months following the Covid-19 outbreak.

The majority of the additional mortgage securitization will likely be in the agency sector that is supported by mortgage finance agencies Fannie Mae, Freddie Mac and Ginnie Mae.

"Some are going to the non-agency market, but most of it will go into the agency market," said Chris Flanagan, head of US mortgage and securitized products research at Bank of America.

Private-label RMBS supply has...

The high-grade primary expects three deals on Monday, while high-yield is planning for two offerings.

Bank of America is stepping in with a FIG issue since it announced earnings last week.

The structured finance primary is expected to be hopping this week.

HIGH GRADE

Bank of America is leading the way in the US high-grade bond market Monday with a two-part trade.

This is the first deal announcement from a global systematically important bank since all of the big six US banks reported second-quarter earnings last week.

US Bancorp was the first regional bank to come to market post earnings last week, pricing a US$1.25bn 10-year at 83bp over Treasuries.

Bank of America is offering a new 11-year non call 10 bond, while also tapping its outstanding 2.676% 21-year non call 20 with initial price thoughts on both fixed-to-float notes set at Treasuries plus 145bp area.

Toyota Motor Credit is in the market as well, shopping a US$500m...

Let the good times roll! The top five US investment banks in terms of revenue and market share pulled in US$42bn in revenues from a stunning performance across trading and underwriting last quarter – US$17bn more than a year ago – helping them build massive reserves as they prepare to weather the impact of the coronavirus crisis.

Bank chiefs warned the exceptional trading and underwriting levels will not last – although analysts said the banks might have already set aside all they need to shield them from a rise in bad loans coming down the tracks.

Revenues from fixed income, currencies and commodities from the big five banks hit US$23.4bn in April-June, up 95% from the same period a year ago. Equities trading brought in another US$9.9bn, up 27%. That meant the five banks pulled in US$13.5bn more from trading than a year ago.

The five banks, led by record results from JP Morgan, Goldman Sachs and Morgan Stanley brought in a further US$9.2bn from debt and...

Carnival levered investor faith in the resurrection of the cruise industry last week, as it landed just over US$1.26bn-equivalent of subordinated debt which will rank behind billions of dollars in debt already raised by the company since the coronavirus crisis.

The cruise business has been one of the worst hit by the crisis, after several ships, including some owned by Carnival's Princess Cruises, became coronavirus hotspots.

Like many other cruise lines, Carnival now has no income, as its ships have been languishing in ports for months after all voyages were suspended.

But the company managed to raise additional cash to weather the Covid-19 downturn on the back of optimism about what may still seem a far-fetched scenario: the promise of a workable vaccine.

Global co-ordinators JP Morgan, Goldman Sachs and Deutsche Bank sent out price talk on Wednesday for two 5.5-year non-call three offerings; 10.25%–10.5% for a €400m euro note, and 10.5%–10.75% for a...

US Bancorp became the first US bank to hit the high-grade bond market post earnings on Thursday, bringing a new US$1.25bn 10-year holdco bond as investors assess the fallout from the Covid-19 pandemic on the financial sector.

The holdco, rated A1/A+/A+, has set a final spread of 83bp over Treasuries, the tight end of guidance of 85bp (+/-2bp) and well inside initial thoughts of 105bp area.

At the final spread, the holdco is coming in line or inside where bonds issued by other regional banks have been trading.

PNC has 2.55% January 2030s trading at around 85bp over Treasuries on average this week, while Truist Financial has 1.95% June 2030s trading at around 90bp, according to MarketAxess data.

US Bancorp was last in the market on May 8, when it priced a US$1.5bn 5-year bond. Today's deal is the bank's third transaction of the year, bringing its total amount raised year- to-date to US$6bn across five tranches from both its holdco and opco...

Norwegian Cruise Line became the second cruise line to return to the bond market this week to raise additional cash to weather the Covid-19 downturn as hopes of a virus vaccine drive investor optimism.

NCL announced a US$675m 5.5 year non-call three senior secured note via lead left JP Morgan, tightening to guidance of 10.50% area from initial thoughts of 10.75% area. The notes carry Ba2/BB ratings.

It follows a deal week from Carnival Corporation which raised around US$1.26bn across euro and dollar high-yield bond markets in an upsized trade on Wednesday.

Both companies were in the bond market for the second time since raising cash to help weather the Covid-19 pandemic.

Optimism about a potential vaccine for the virus has provided a positive market backdrop and raised hopes that the cruise industry will be able to recover at a faster pace than expected.

"There is a growing sense of expectation that this is something we can resolve and if that's...

South-East Asia has retained access to the international capital markets throughout the Covid-19 crisis, helping governments and companies respond to unprecedented challenges.

Far from American shores, US dollar bond records are tumbling in the often-overlooked pockets of South-East Asia.

According to Refinitiv data, companies and governments in the 10 ASEAN countries sold US$42.1bn of bonds in G3 currencies in the first half of 2020, more than double the same period last year. That is a stark contrast with the bigger Chinese market, where G3 bond sales are down 26% on 2019.

South-East Asia’s bond rush accelerated in the second quarter, jumping to US$28.1bn from US$11.4bn a year earlier, as more issuers turned to the international capital markets in response to the Covid-19 pandemic.

The record pace of issuance is even more remarkable given the challenges facing the region’s economies as a result of the coronavirus. The Asian Development Bank in...

The Bank of Japan's expanded corporate bond purchases are driving down yields in the primary as well as the secondary market, so much so that some new corporate bonds are getting priced flat or even inside those of a public sector policy bank.

Last Friday, railway operator Odakyu Electric Railway, rated A+/AA– (R&I/JCR), priced a ¥60bn (US$559m) three-year bond at par with the tiniest possible coupon of 0.001%.

Hankyu Hanshin Holdings, another railway operator also rated A+/AA– (R&I/JCR), and construction machinery manufacturer Komatsu, rated AA– (R&I), offered three-year bonds with the same 0.001% coupon. Both bonds, of respectively ¥20bn and ¥40bn, priced above par at 100.002 to yield even closer to zero.

On the other hand, state-owned Development Bank of Japan priced a ¥30bn long three-year bond with a 0.001% coupon at par.

Most buyers of the new corporate bonds are just looking to sell them to the BoJ at a profit.

"I see no other...

The European high-grade market is wide open for corporates, but they must be willing to pay the extra premium demanded by those investors still at their desks.

Corporate supply has all but evaporated from the European primary this week with only a single new deal, TenneT's €1bn 2.374% green PNC5.25 hybrid priced on Wednesday, but the market is still ready for new paper, although it may cost to print, say bankers.

"If you want to come you can. You can still get a deal done if you pay the right concession," said a syndicate banker.

"But people have to keep in mind that not all investors are still in so those that are will look for more of a premium."

TenneT, for example, paid more than a 10bp premium in spread terms on its new hybrid issue according to one lead, although arguably a greater concession is to be expected on a higher beta instrument.

Supply predictions for the rest of July have ranged from €4bn to €7bn with several syndicate officials...

Goldman Sachs blew past earnings expectations in the second quarter as revenues from fixed income trading surged 149% and underwriting revenues more than doubled.

The bank earned US$2.25bn, or US$6.26 per share, after revenues rose 41% from a year earlier to US$13.3bn in the April-June quarter. Analysts were expecting Goldman to earn US$3.78 per share on average, according to the IBES estimate from Refinitiv.

Goldman posted its best quarter in fixed income, currencies and commodities trading in nine years, with revenues rising to US$4.2bn from US$1.7bn a year earlier. That was due to strong client activity in intermediation and financing, particularly in interest rate products, credit products and commodities.

Revenue from equities trading rose 46% to US$2.9bn — the bank’s best quarter in 11 years, on strength in cash products and derivatives.

The strength in trading was matched by underwriting income in the quarter as companies issued record debt and...

Shares in Chinese chipmaker Semiconductor Manufacturing International will begin trading tomorrow on the Shanghai Star market after it completed a record Rmb45.3bn (US$6.4bn) IPO, the world's biggest this year.

Listing had previously been expected on July 22, the first anniversary of the technology-focused Star board.

SMIC, the first overseas-listed red chip to float in the A-share market, offered 1.69bn A-shares, or 23.6% of its enlarged capital. It sold 50% of the offering to 29 strategic investors, including the deal's two sponsors and two overseas entities, GIC Private and Abu Dhabi Investment Authority.

The other strategic investors are 22 state-owned funds, insurers and trust companies, and three private-sector institutions – Fosun International and two companies with business connections to SMIC. All will face lock-ups of 12–24 months.

Institutional investors took 70% of the remaining shares and retail 30% after claw-back.

Retail investors...

Citigroup's fixed income trading revenues and underwriting fees surged in the second quarter to help the bank absorb a sharp jump in provisions to cover loan losses due to the coronavirus and lockdown measures.

Fixed income, currencies and commodities revenues hit US$5.6bn in the April-June quarter, up 68% from US$3.32bn a year earlier.

Its equities trading dipped 3% from the year before to US$770m, which was worse than expected and lagged behind rival JP Morgan.

Citi's finance chief Mark Mason said FICC was led by strength in rates and currencies, spread products and commodities. Cash equities had been strong, but was offset by weak equity derivatives and prime services.

It left overall Q2 trading revenue up 55% from a year earlier, although Mason said that was likely to slow to more normal levels in the remainder of this year.

"We've seen a very strong performance in our markets business and in particular in fixed income," Mason told analysts on...

SEOUL (Reuters) - South Korea outlined a plan on Tuesday to spend 114.1 trillion won ($94.6 billion) on a “New Deal” to create jobs and help the economy recover from the coronavirus fallout, anchored in part by “green” investment in electric vehicles and hydrogen cars.

Sweden is finalising the details for the launch in August of its first green bond, appointing the banks to lead the transaction and naming its maturity target.

The Swedish debt office has picked SEB as green structuring adviser, and lead manager with Barclays, Danske Bank, NatWestMarkets and Swedbank.

"With this new bond, we can offer an investment alternative with low risk and a distinctly green stamp of approval," acting head of debt management Anna Sjulander said in a statement.

Sweden is eyeing a transaction with a deal size of approximately SKr20bn (US$2.18bn) and a maturity of seven to 10 years.

"Investor demand for the green bond seems to be strongest for maturities between seven and 10 years," said Johan Bergstrom, acting head of funding at the debt office.

"A maturity within this range is also well-suited to our current borrowing plan and overall debt management."

Sweden will use the proceeds to back projects in climate investments,...

Zombie companies, those that cannot meet debt costs through current earnings, are on the rise in Europe with record growth seen last quarter. However, better economic data and an active ECB mean Bank of America analysts are bullish on high-grade corporate bonds.

In the second quarter more than 10% of non-financial corporates in the Eurostoxx 600 Index had an interest rate coverage of less than 1x over the preceding 12 months, wrote the analysts recently.

That compared with just over 7% of corporates defined as a zombie in the first quarter of the year, with the quarter-on-quarter increase the biggest ever.

The percentage of zombie companies in the second quarter was also bigger than at the peak of the global financial crisis and almost equal to the all-time high of 10.6% recorded in June 2016.

Energy and industrials are the two sectors in Europe contributing most heavily to the overall volume of zombies, weighed on by a fall in commodity prices and the...