Deutsche Bank looks to make its mark on sustainable finance which is on the rise and has amplified its pace since the onset of the pandemic crisis.

The bank, which admits to having been criticised for lagging behind peers on setting ESG targets, sent a strong signal on Tuesday with the launch of a maiden €500m 6NC5 green bond which was nine times subscribed.

Deutsche published its first ever ESG quantifiable targets in May. The firm aims to execute €200bn in sustainable financing and investments by 2025.

The target includes bonds placed and loans granted by Deutsche, as well as sustainable assets managed by its private bank.

The firm has based its own ESG standards on the EU Taxonomy for matters relating to renewable energies, sustainable production or sustainable farming.

However it had to develop its own criteria for areas where the EU has yet to develop its own standards, such as the social sphere.

“The consultancy ISS ESG has scrutinised...

Credit Mutuel Arkea has joined the growing ranks of financial institutions raising bond market funding to tackle the social and economic impacts of Covid-19, sealing a €750m senior non-preferred bond ahead of Thursday's ECB meeting.

Across the globe, financial institutions have begun issuing social bonds to aid relief efforts. In Europe, issuers have progressed down the capital stack, with BPCE selling a Covid-19 covered bond last month, BBVA a senior preferred last Wednesday, and now Arkea an SNP offering.

Leads ABN AMRO, Credit Agricole, Credit Mutuel Arkea, Santander and UniCredit opened books for the nine-year non-call eight transaction with initial price thoughts of 180bp area over mid-swaps.

The spread was subsequently fixed at €150bp, before the size was set at €750m. Books were over €2.7bn, excluding JLMs.

The deal was judged to have landed 5bp-10bp inside fair value for a non-ESG 9NC8 Arkea SNP, extrapolating from its secondaries.

Arkea's...

Brazil stepped into a risk-on market on Wednesday as investors shrugged off gloomy economic prospects for the country and pushed order books to US$18bn on a US$3.5bn two-part bond.

The deal comes amid growing optimism over an economic recovery in China and the US, and just a day after the Brazilian Real rallied about 3% against a weaker dollar.

"[I'm] just amazed at the resilience of the market and the search for yield out there right now." said Sebastian Lema, an analyst with asset manager Noctua Partners.

"Brazil was met with a ton of demand."

Cheap initial price thoughts and investor demand helped leads tighten pricing considerably with the US$1.25bn five-year note priced at 3% and the US$2.25bn 10-year note at 4%, well inside initial price thoughts of 3.5% and 4.6% area, respectively.

Even after tightening final yields come nicely over the Brazilian curve, where the 2025 and 2029 were trading at 2.75% and 3.8%, according to Refinitiv...

NordLB Luxembourg caused a bit of a commotion among covered bond investors on Wednesday with a €500m seven-year transaction which was more than twice subscribed.

Lead managers - Deutsche Bank, NordLB, Societe Generale, UBS and UniCredit - met robust demand despite the June 2027 Lettres de Gage Publiques not being eligible for the CBPP3.

“The market as such is so eager for paper that the fact the ECB won’t provide help as a buyer of last resort did not put people off,” said a banker away from the leads.

The bank opted to edge further along its curve for its second foray of the year, having visited the five-year spot with a sub-benchmark green LdG in January - the issuer's longest outstanding LdG, prior to the new deal.

NordLB picked the seven-year maturity with the view of quenching real money accounts' thirst for positive yield, which a vast majority of names are unable to offer at present, according to one of the lead managers.

NordLB put its...

A senior executive at the eurozone's bailout fund made a plea to member countries to use its new pandemic crisis support credit line in a blog published on Wednesday.

In a post entitled "out of the box, a new ESM for a new crisis," European Stability Mechanism chief financial officer Kalin Anev Janse said that looking at the all-in costs of the fund, it "would be attractive for 11 member states."

Of the 11 states named, Greece, Italy and Cyprus would stand to benefit the most. For instance, the yield on Greece's 10-year bond is 1.52% according to Tradeweb, while the equivalent ESM yield would be just 0.08%, all-in.

One of the most persuasive points made is the savings that participation could offer. "In real life, under current market conditions, for some countries the cost savings could be up to €6 billion for 10 years. This is a real cash saving for taxpayers," wrote Janse.

There would also be other benefits, with arguably the most important being that...

Nomura is reviewing its Greater China strategy including its operations in Hong Kong, the bank's CEO Kentaro Okuda told the Financial Times in an interview published today.

Nomura has around 1,000 staff in Hong Kong, although Okuda alluded to difficulties as a result of last year's anti-government protests and recent opposition to the new security law when describing the environment as "not the same as it used to be".

Okuda said there were no plans currently to reduce staffing levels in Hong Kong, although he said that Nomura was expanding its Singapore office.

He also suggested that the bank might look to expand its newly established securities joint venture in mainland China, Nomura Orient International Securities.

Okuda officially became CEO on April 1 this year and outlined his first strategy update two weeks ago in which he said the brokerage firm planned to expand its activity in private equity, private debt and infrastructure as well as bolster...

Investors were unperturbed by reports of corporate restructuring plans at Airbus as orders peaked over €15bn for the plane maker's second bond issue in just over two months.

Having seen its revenues collapse since the start of the year with airlines delaying or canceling orders of new planes, Airbus (A2/A) made the decision to tap the euro market for the second time since late March.

"They have seen their funding needs increase substantially," said a lead.

"Airlines, their customers, are not in the best of health and ultimately they need to make sure they have cash to take care of any funding needs that arise."

In May, it was reported that the company had told staff that it must "resize" as it cut production and CEO Guillaume Faury reiterated the sentiment that there was still a chance that Airbus would not survive the crisis, reported Reuters.

"If you are a treasurer for a company that needs cash, you would be brave to wait to issue," said a...

Argentina and its bondholders look to be inching closer to a restructuring agreement after the government extended its deadline for its debt exchange and said it could further adjust its offer in an effort to broaden buyside support.

The sovereign has now given bondholders until June 12 to participate in an exchange for over US$65bn of bonds, extending it from a prior deadline of June 2.

This comes after the International Monetary Fund said in a statement Monday that "there is only limited scope to increase payments to private creditors while still meeting the debt and debt service targets."

In light of such statements, the government said it is assessing additional adjustments to its proposal after revising its terms last week.

The Ad Hoc group backed by BlackRock and the Exchange Bondholder group representing holders of bonds issued during the 2005 and 2010 restructuring also sweetened their own offer last week.nL1N2DB1I9

"The difference between...

Repsol has become the second corporate to issue hybrid bonds in just over a week as a strong market tone has given fresh impetus to the asset class.

Renewed interest in riskier areas of the credit markets has been evident for a few weeks with the return of supply in the emerging markets, high-yield and bank capital sectors.

While issuance of corporate hybrids has been slower to return, the size of the order book for Repsol's deal today and Swiss perfume maker Firmenich's market reopener last week suggest that investors are pleased to see the product back.

Demand for the Spanish oil company's dual-tranche deal, comprising €750m perpetual non-call six and €750m perpetual non-call 8.5-year notes, reached €11.5bn.

Last week, Firmenich got a €4.3bn book for a €750m perp non-call 5.25-year bond.

With fears about the impact of the coronavirus pandemic subsiding - in terms of assessing credit risk, at least - investors are becoming more confident in buying...

India's Yes Bank is planning to file for a Rs80bn-Rs100bn (US$1.07bn-$1.33bn) follow-on offer later this month, people with knowledge of the transaction said.

The bank has board approval to raise up to Rs150bn via a qualified institutional placement, rights or follow-on offer in one more tranches.

The bank has opted for a follow-on offer as it will be able to offer a higher discount to investors. An issuer can offer a discount of only 5% above the floor price in a QIP but there is no cap for a follow-on offer.

Axis Bank, Bank of America, Citigroup, HSBC, Kotak, and SBI Capital are the banks on the transaction.

In March, State Bank of India acquired a 48.2% stake in the loss-making bank for Rs60.5bn. In addition a combined Rs39.5bn at Rs10 per share is coming from peers Housing Development Finance Corp (for an 8% stake), ICICI Bank (8%), Axis Bank (4.8%), Kotak Mahindra Bank (4%), Federal Bank (2.4%), Bandhan Bank (2.4%) and IDFC Bank (2%).

SBI must...

May saw the fourth highest monthly supply of new high-yield corporate bonds on record, according to IFR data, as borrowers take advantage of low borrowing costs to term out debt, add liquidity and build war chests for opportunistic investment.

High-yield borrowers brought US$43.859bn of new bonds to the primary market in May, according to IFR data.

Despite the heavy supply and economic impact of the Covid-19 pandemic the market delivered total returns of 5.74% in May and average spreads dropped from 770bp over Treasuries to 654bp over, according to ICE BofA data.

"We're seeing no evidence at all that there is any let up in demand," said one head of leveraged finance. "We are being balanced and not pounding on the table that issuers must go, but we think this market has legs and has a reason to be where it is."

September 2013 remains the busiest on record with US$49.531bn issued, and only September 2012 and May 2013 rank above last month in terms of...

There is broad backing in stock markets for cutting the trading day by 90 minutes in a coordinated way across European exchanges, the London Stock Exchange said on Monday.

The LSE published feedback from its public consultation on making trading hours more family-friendly to help recruit more women to trading desks and improve mental wellbeing.

"There was also widespread consensus from respondents that any change to trading hours would ideally require a broadly aligned approach across European exchanges and other trading venues," the LSE said in a statement.

"Without this harmonisation, the goals of improved diversity and wellbeing would be harder to achieve, given the pan-European nature of many trading roles in the financial industry."

Euronext is still conducting its own consultation on trading hours and has questioned the rationale of a "London proposal".

The current European trading day is 0800-1630 UK time, longer than in Asia or Wall Street,...

Telepizza bonds plummeted in value on Monday after the Spanish pizza delivery company said it needs more cash, just over a year after its buyout by KKR.

The company, which has already fully drawn its revolving credit facility, said on Friday that it may require up to €95m-€115m before debt servicing to "maintain adequate liquidity".

Telepizza's €335m 6.25% May 2026s were seen at 51 bid, down from 82 at the end of last week.

The company also said that it is in discussions with Spanish commercial banks to obtain state-guaranteed financing of up to €20m.

"Telepizza is currently revisiting its business plan and requires additional capital to execute an operational turnaround and arrive at a more sustainable capital structure," the company said in its first quarter results presentation, published on Friday.

"We are exploring all available options to improve our liquidity and look to secure support from shareholders and bondholders," it said.

The...

Changes Amazon tranche number

No rest for the weary, as June is starting with a bang and at least 11 IG offerings on Monday.

Amazon is leading the parade, planning to deliver a six-part offering today.

May was the third busiest IG volume month on record, with US252.895bn priced.

And high-yield is not slouching today, kicking off with three deals slated for sale.

HIGH GRADE

E-commerce giant Amazon is the main focus of the US high-grade primary on Monday to kick off what is expected to be an active June.

Amazon is shopping a six-part deal with three, five, seven, 10, 30 and 40-year maturities. Bookrunners Deutsche Bank, Goldman Sachs, HSBC and JP Morgan started initial price thoughts in the range of Treasuries plus 40bp to 150bp area.

This is Amazon's first deal in the market since August 2017, when it priced a US$16bn seven-part bond, and just its fourth offering in the market ever.

This is a good time to come to...

Sustainability-linked bonds were billed as the next big thing when the first one was sold in 2019 but expected 2020 volume of up to €20bn has so far failed to materialise and deals remain in the wings as work continues on resolving technical issues.

The coronavirus pandemic has been the obvious impediment to the asset class taking off. But there are other obstacles that issuers are having to navigate.

Bankers nonetheless counsel against writing off sustainability-linked bonds and say that the market could see its second transaction before the end of summer as interest and enquiries remain high.

"In the coming months we expect to see more innovation in the sustainability-linked space and different structures in this format," said Cristina Lacaci, Morgan Stanley’s head of green and sustainability bonds in EMEA.

Sustainability-linked bonds, also known as KPI-linked or SDG-linked bonds, are tied to companies' ESG strategies and the UN's Sustainable...

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Citigroup leapt from seventh to first in EMEA ECM league tables last week thanks to Tuesday evening's SFr2.55bn (US$2.64bn) sale of Saint-Gobain's stake in Sika, but there was no fanfare: the deal was not covered and the proceeds secured by the seller implied that the lead had given up at least some of its fee in the process.

Some rivals inevitably enjoyed the US bank's misfortune with wild speculation about how much of the 10.75% stake it was left with and how losses could quickly add up if the stock dropped –

shares on Friday remained below where Citigroup had bought them.

However, there was also genuine frustration and no little surprise that the accelerated bookbuild had fallen short as it was hotly anticipated. Some institutions had approached French construction materials company Saint-Gobain directly in recent weeks to express interest in buying the shares, when normally their interest would be conveyed via banks. Multiple banks had also pitched prices...