Reuters: Bankruptcy News: European financials get brief moment in the sun

Reuters: Bankruptcy News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

European financials get brief moment in the sun Jul 6th 2012, 10:10 By Helene Durand Fri Jul 6, 2012 6:10am EDT LONDON, July 6 (IFR) - European financial institutions this week took advantage of one of the best market windows this year for raising senior and subordinated debt, giving them much-needed breathing space after a difficult second quarter. According to Thomson Reuters data, banks and insurance companies raised almost USD13bn-equivalent in the first four days of the third quarter, nearly half of the total USD27bn issued in the European market for all of Q2. "The demand that we saw for deals this week highlights that there is still a lot of cash to be put to work," said a FIG syndicate banker. "We've known it for a long time but we needed the market to stay open for long enough to be able to prove it." There was further encouragement for the sector amid signs investors were less risk-averse to more difficult credits. Intesa Sanpaolo raised EUR1bn of three-year money, the first time the Italian lender had been able to come to market since the ECB's second LTRO in February. It did not come cheap, however, and the bank paid 410bp over mid-swaps with a coupon of 4.875%, not far off the 5% the bank paid for five-year money a few months ago. "410bp was a big spread and while it was nice to see the deal get done, I am not sure it convinced everyone that they have market access," said a banker. "However, I think in their case, there might be some regulatory pressure on them to go in the market when possible." However, the leads said that the deal was about more than demonstrating access. "It's not just about ECB or covered bond funding, and banks need to do deals that don't encumber assets," one said. TO HAVE, AND HAVE NOT "It's great to see that the market has room for a Nordea senior or an ABN subordinated deal that is broadly distributed and a Raiffeisen Bank International (RBI) or an Intesa that appeals to a more specialist investor base," said another FIG banker. But there is still a huge gulf between the haves and have-nots in the European financial landscape. At the tight end of the spectrum, Svenska Handelsbanken raised three-year funding at 60bp over mid-swaps, paying a mere 1.5% coupon, some 350bp inside Intesa and almost 90bp less than Societe Generale paid at the same maturity. Somewhere in between was Danske Bank who successfully tested investor appetite after its two-notch downgrade by Moody's to Baa1 at the end of May, when it borrowed EUR1bn for three-years at 168bp over mid-swaps. At the other end of the scale was the EUR750m 30NC10 Tier 2 issue for Italian insurer Generali, the first subordinated trade from a peripheral issuer in over a year, albeit with an elevated 10.125% coupon. For more details see story ABN AMRO's EUR1bn 10-year bullet Tier 2 issue, the first from a European bank since February was also another positive sign that the market is finally opening up for more difficult trades. The borrower attracted over EUR2.5bn of demand although it had to pay a 75bp premium over its outstanding 2021, indicating just how important a trade it was for the Dutch bank. "Under the expected implementation of CRD4, we will have a large amount of Tier 2 that will not be eligible as capital from January 1 2013 and we wanted to make use of windows of opportunity in the market, thus avoiding a situation where we might be forced to raise capital in a very stressed market," Marcel Klopper, head of capital management at ABN told IFR. Credit markets looked set to end the week on a poor note, justifying treasurers' decisions to print. Markit's Senior Financials Index was quoted at 272.5bp on Friday morning, almost 12bp wider than where it started the week, while the Subordinated was almost 27bp wider, at 444.5bp. (Reporting by Helene Durand; Editing by Alex Chambers, Julian Baker) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions