International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

When the European Investment Bank priced its first digital bond in April, it not only signified an inflection point in the digitalisation of the capital markets but represented another example of the bank’s commitment to developing the financial markets.

The €100m note is described as potentially significant as sending the first email.

The EIB has racked up several “firsts” in the bond markets over the years, including the world’s first green bond in 2007. So, it was little surprise to see the European Union’s long-term lending institution make an early appearance in the nascent digital financial markets with a €100m zero-coupon two-year note launched on blockchain. It was an experiment the bank felt compelled to make.

“Given the role of the EIB in terms of market development, we had to be present in this digital world,” explained Richard Teichmeister, the EIB’s head of new products and special transactions. “We had to understand the implications of the...

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

El Salvador floated around the idea of a potential bond deal last week during an investor presentation, an announcement many are seeing as a possible move away from an awaited deal with the International Monetary Fund.

In investor calls last week, El Salvador finance minister, Alejandro Zelaya, informed investors it was contemplating an external bond issuance to finance some of its short-dated local notes, according to sources. The announcement prompted some market participants to question whether the country will reach a needed agreement with the IMF as it comes against maturing liabilities in 2023.

"For us, if they do look to come to the market it really brings into question whether or not they’re interested in pursuing an IMF program. Why would they be doing that at a time when it’ll be prohibitively expensive for them? It doesn’t make sense in the current environment," said an investor following the credit.

The sovereign's bonds have continued to fall...

The greenium – or green premium that borrowers can secure by issuing green and sustainable bonds – continued to expand in the second quarter despite a surge in ESG-labelled bond issuance, and is also increasing as a percentage of spread, according to research by Natixis.

The financial benefits of issuing green debt over conventional debt was also reinforced by French real estate firm Gecina, which saw a big spread compression after reclassifying all of its outstanding debt to green bonds in June and outperformed the market and its peers.

The first signs are also starting to emerge of pricing variation linked to investors’ perception of issuers’ ESG credentials. Greener companies are attracting a bigger greenium in the secondary market, while some high-emitting companies, including airports and oil and gas companies, had showed no premium, according to the research.

The greenium expanded in the second quarter to –3.1bp for corporates, 0.5bp wider than the first...

Combined ESG-labelled bond and loan issuance in 2021 is rapidly approaching the major milestone of US$1trn and its percentage share of the overall market is rising as investors take a tougher line with companies that are not yet raising sustainable debt.

Year-to-date ESG bond and loan issuance totals US$951.5bn (US$598bn of bonds and US$353.5bn of loans) after comfortably exceeding full-year 2020 totals of US$756.6bn at the half-year point, according to Refinitiv data.

Combined ESG volume is expected to pass the US$1trn landmark in August.

"US$1trn of combined ESG bond and loan issuance is very significant. If you are not participating in the ESG capital markets in some way, your absence begins to make a statement," said Marilyn Ceci, global head of ESG DCM at JP Morgan.

ESG bond and loan issuance now accounts for 10.6% of all issuance and has nearly doubled from 5.4% in 2020 amid a change in tone from investors who are taking a dim view of companies...

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

Peru sovereign bonds recovered in secondary trading on Monday following the confirmation of former World Bank economist Pedro Francke as the country's new finance minister, but expected tensions between the moderate left minister and the country's far left executive continue to drive concerns.

There was turbulence in the bond market on the first days of President Pedro Castillo's new administration after his appointment last Thursday of Guido Bellido, a far-left member of his Peru Libre party, as prime minister.

Peruvian bonds slumped on Friday after Bellido was named. There was further pressure on the bonds when Francke, who was widely expected to be sworn in as finance minister last Thursday along with other ministers, abruptly left the swearing-in ceremony, sparking concerns among investors he had rejected the post and that Castillo was backpedaling the moderate stance he had adopted in recent weeks.

However, the moderate left Francke was confirmed as the...

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

International Financing Review is the leading source of fixed income, capital markets and investment banking news, analysis and commentary. IFR's team of market specialists report on capital-raising across asset classes, from rumour to market reception.

In the face of the European Banking Authority’s evident skepticism about the product, some investment banks are looking to redesign sustainability-linked bonds for bank issuers. But even tweaked structures appear unlikely to feature on deeply subordinated bank capital instruments, whereas the outlook for green or social junior debt is positive.

“We don’t think the door is closed to sustainability-linked structures if we can design features that respect prudential criteria and regulators’ concerns,” said Nik Dhanani, global head of strategic solutions at HSBC.

“We clearly expect sustainability-linked bonds could become a more mainstream part of the bank funding market, if endorsed by relevant authorities,” Dhanani said, adding that regulators may “also be sensitive to operational feasibility in terms of approval processes, particularly if we see a wide variety of different structures”.

But one banker said the EBA’s AT1 Monitoring Report in June was “less...