Financials’ debt provides busy summer for FIG bankers


Peter Mason, Barclays’ co-head of Financial Institutions Group banking for Europe, the Middle East and Africa, said: “Given what you’d normally expect at this time of year, you could say the FIG [debt] market – particularly for subordinated debt – is white hot right now.”

FIG borrowers in Europe priced some $ 27.3 billion of bonds, preferred share issues and medium-term notes between August 1 and 16, according to data firm Dealogic. That’s up from $ 22.6 billion over the same period in 2015, and is the highest total for the period since $ 29.5 billion back in 2009. It is also a higher total than in June or July of this year.

In the past week, Standard Chartered raised $ 3 billion in US dollars across three tranches of three-year and 10.5-year paper, following the pricing of a $ 2 billion perpetual additional tier 1 issue on August 11.

Societe Generale priced a $ 1 billion, 10-year issue on August 16. Other big deals from financial borrowers earlier in the month included a $ 2.65 billion AT1 trade from Royal Bank of Scotland, UBS’s $ 2.5 billion senior unsecured deal and a $ 2 billion issue from Barclays.

Stripping out European banks’ roles running deals for their own parent group, Goldman Sachs and JP Morgan are at numbers one and two in Dealogic’s league table for European FIG in 2016, with about $ 52 million in deal value separating the Wall Street giants.

Bankers expect sizeable issuances still to emerge over the coming week. If this August beats the $ 34 billion from August 2015, it will be the best total for the month since 2010, which had $ 50 billion.

Mason said: “This August will likely see one of the biggest FIG supplies for the same period in recent years. The last four weeks have all been busy.”

Quantitative easing and bond-buying programmes have encouraged issuance and investment.

Piers Ronan, head of FIG syndicate for Emea at Credit Suisse, said: “The main market driver and the reason why the market bounced back so obviously after the Brexit referendum was the technical support provided by monetary policy. We already had QE in place from the European Central Bank and that had an effect in keeping the cap on spreads.

“What we saw was a reduction in the available stock of debt outstanding from corporates and insurance companies, because that’s what the ECB is buying, and that creates a gap that needs to be filled by financial institutions.”

So far in 2016, European FIG debt capital markets issuance of $ 320.3 billion is down about 10% year-on-year.

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