Send us a text◆ Emerging market and financial institution bonds on fire after Fed cut ◆ Huge demand spurs massive issuance ◆ But signs of weakness appear in corporates and public sector bonds Markets were unsure what they wanted from the Federal Reserve, but the 50bp rate cut it doled out last week turned out to be just the ticket. In credit markets, all cares and qualms have been forgotten, in one wild party of risk-taking and risk-issuing.Emerging market issuers of all classes, from Saudi Aramco and Abu Dhabi wealth fund ADQ to Agrobank of Uzbekistan have been piling greedily into the market, making up for two lean years of minimal issuance. Deals are flying, making even these usually slow and wary issuers scramble to put issues together.If you thought banks had done masses of funding and didn’t need any more, think again —there is an additional tier one capital festival going on in the US, with half this year’s issuance having come since August. Santander, which trumpeted having finished its funding for the year in June, found space for another €3bn, though it promises not to return to euros again till next year.It’s a strong market for corporate bonds, too, but banks have noticed a big rise in investors getting price-sensitive and dropping out of orderbooks. Deals are still going well, but it’s an early sign of fatigue and oversupply.And the more cerebral public sector bond market is fretting. Euro deals just aren’t going well and spreads have widened markedly. There is still the dollar market, but something isn’t right in Europe. Is it France?PLUS a brief interview with Stefan Wintels, CEO of KfW.

Send us a text◆ The new rate cycle begins at last ◆ Can Deutsche Bank avoid being overtaken by UniCredit? ◆ Carmakers in trouble ◆ The DLT help no one wantedUniCredit’s stealth raid to grab 9% of Commerzbank last week threatens Deutsche Bank’s historic primacy in German banking. What can Deutsche CEO Christian Sewing do about it? We discuss three courses of action — one clearly better than the others.That’s not the only trouble in Germany: BMW is having to make a €1bn product recall and Volkswagen might have to close factories in Germany. This week two other companies in the automotive sector, Daimler Truck and Renault’s RCI Banque, came to the bond market. We look at how the market treats borrowers when something is amiss in their sector.But the reason this week will go down in history is the first Federal Reserve rate cut since the onset of Covid — the true beginning of the new easing cycle. Markets have known it was coming — now the ride has begun, with a 50bp move that has leapfrogged the European Central Bank and Bank of England. We find out how public sector borrowers are handling the new environment.And there is a dispatch from the blockchain bond market. ‘I’m from the government and I’m here to help,’ said the European Union last year — but it hasn’t.

Send us a text◆ UniCredit and Orcel quackers for Commerzbank ◆ Draghi aims his bazooka at CMU ◆ A new dawn for corporate hybrid capitalThis week we looked at different types of union in the European Union, from big bank tie-ups to the latest push for Capital Markets Union.Calls for big time M&A in Europe's banking sector have rung out, often unanswered, for decades. But this week, UniCredit bought a chunk of Commerzbank, sparking talk that it will buy the rest.We discuss how UniCredit built its stake, what the consequences will be for Europe's banking industry and the symbolism of rubber ducks.We also delved into ex-ECB president and Italian prime minister Mario Draghi's latest call for Capital Markets Union. We discuss why he thinks it hasn't happened yet, and how he think it might come to be.Finally, we look into new types of corporate hybrid bonds and why a deal from Bayer this week could herald a new era for the product.

Send us a Text Message.◆ Natixis’s sometimes requited love affair with elite M&A bankers ◆ What the French election could to ESG, and to the bank bond marketWhen a posse of high-powered Paris dealmakers threatened to walk out of Natixis because they were being treated like “just another employee”, rivals said ‘I told you so’. They were sure Natixis’s unique way of doing M&A banking was falling apart.Nine months later, not so. France’s fourth largest investment bank, owned by the mutual savings bank group BPCE, is sticking to its plan ― and doubling down. Natixis’s ploy is, rather than trying to build its own M&A department, buying stakes in a growing network of independent boutiques. As investment banking correspondent David Rothnie explains, the key to managing this potentially unruly throng is flexibility.Before that, we look with corporate debt editor Mike Turner at how investors are pouring money into environmental, social and governance bond funds this year, and how that is playing out for issuers.And with the first round of the French parliamentary election coming this weekend, bank finance editor Atanas Dinov explores what the outcome could do to French access to the capital markets, especially for banks.

In the second part of GlobalCapital’s exploration of how bond syndicate desks are changing, after a swathe of the discipline’s senior bankers have been made redundant, we discuss the syndicate job itself.Technology and market transparency have stripped away some of the grunt work, but also made knowledge easier to come by. Are banks thinking they don’t need so much experience on desks?Bankers admit pricing bonds has often become more routine. But when markets get difficult, or situations do, as with Equinix’s recent pulled deal, you need experience.We also talk to Ana Fati and Mike Turner about the latest plunge down for Thames Water after shareholders refused to put in much needed equity. What are bond investors and lenders thinking about the UK water sector?And it’s been a huge week for African bond markets, with Zambia finally getting its official creditors and bondholders to agree to a restructuring. This one is meant to be tougher to bondholders, but if Zambia does well economically, it will have to pay extra. George Collard explores whether that is a good thing, or will prove a burden.

North Africa is one of the most important regions for the European Investment Bank’s financing outside the EU, and one where it sees great potential for funding sustainable development.In this special podcast supported by the European Investment Bank from Marrakech, which is hosting the World Bank and IMF annual meetings, Ricardo Mourinho, the EIB vice-president responsible for Morocco and Tunisia, explores the Bank’s activities in the region.Its presence there is longstanding – in Morocco it has invested €10bn since 1979. The EIB’s involvement is also deepening, with recent investments spanning renewable energy, water, sanitation, education and health. In the immediate aftermath of the September earthquake, the EIB first worked with the Moroccan authorities to repurpose existing investments, and then pledged €1bn to the reconstruction programme.Longer term, climate change is a serious challenge for the region – the need to manage water carefully is becoming a key priority, as is sustainable transport. Mourinho emphasises that “the future is green”, so the EIB will not fund projects that are not Paris Agreement-aligned.Capital Ideas is GlobalCapital's dedicated podcast channel for thought leadership. To find out how GlobalCapital can help your organisation amplify its message, contact:Jack Thomson, [email protected]+44 20 7779 8083

Sustainable finance has become a huge market, with issuers all over the world having sold more than $2 trillion of green bonds. Yet the climate emergency is still getting worse. Finance is committed to aligning with the Paris Agreement, but is it on track?In this special podcast supported by the European Investment Bank to coincide with the World Bank/IMF annual meetings in Marrakech in October 2023, Nancy Saich, the EIB’s chief climate change expert, and Eila Kreivi, its chief sustainable finance advisor, discuss the finance industry’s efforts to become sustainable.They point out that no parts of the financial markets are yet fulfilling the Paris commitment. While finance is flowing to green technologies, this needs to increase massively – and just as importantly, the financing of fossil fuel expansion has to end.Between those two priorities is another – financing the whole economy as it transitions. Saich and Kreivi discuss how the financial system can create standards to define what is an ambitious transition, and what is a just one.Capital Ideas is GlobalCapital's dedicated podcast channel for thought leadership. To find out how GlobalCapital can help your organisation amplify its message, contact:Jack Thomson, [email protected]+44 20 7779 8083

◆ Why the PE industry is going to have to make the IPO market work ◆ Real estate, real refi risk ◆ Managing the SSA bond pipelineThe European IPO market is in a pitiful state. Of the few deals that do make it to book building, some are pulled while some that are priced then tank. Discounts are eye-watering and a lack of liquidity makes bringing mid-cap companies all but impossible. As one ECM banker told us this week, "something has got to give."Well, it turns out it might just be the private equity industry that does the giving. We discover why financial sponsors must start coming to the IPO market next year and what they can do to manage the risks of doing so. "The whole world is trying to work out what this new price of money actually means," said one market participant.It seems to mean little but misery for a number of real estate companies. A sector that thrives on high leverage, it is starting to face genuine refinancing risk now interest rates have soared. We sort those that have access to capital from those that have none and discuss the latter's options for staying alive.Speaking of interest rates, the ECB stood still this week with its monetary policy. We looked into what that means for the sovereign, supranational and agency bond market for the rest of the year, and more importantly, for January — traditionally the busiest month of its funding calendar.

Some corporate borrowers are finding the once verdant loan market a hostile spot to hang out lately, driving some companies to test out bonds for the first time. If a debut deal this week from Germany’s Rewe — which seems to still be able to access loans without any problem — is anything to go by, then the potential debutants planning to take the plunge should feel very confident indeed.In the world of SSAs, the market has been hit and miss in ways that bankers and issuers find hard to define. There are three major theories as to why, as explored in the podcast, but the most striking one is that the market is holding its billions of euros back for the European Union’s late summer syndicated trade. Meanwhile, somewhere famously not in the EU has run into some bother. The UK’s second largest city and England’s largest council, Birmingham, is facing a funding crisis. Beyond the acute problems for the city itself, the financial failures have put a significant dent in long held hopes that the UK local authorities might start to take more funding from the capital markets.Finally, we head to Turkey, where two of the country’s biggest banks — Vakif and Yapi Kredi — were in the market on consecutive days, to the detriment of both deals. The Turkish sovereign has another $2.5bn to raise before the end of the year, so we discuss what can be gleaned from the banks’ outing.

Issuance returned to multiple debt markets this week after the summer drought, with the sovereign, supranational and agency market and corporate bond markets seeing a spurt of trades.While everything was orderly, there was a noticeable lack of pizzaz to many of the trades, with small books compared to historical averages and some issuers needing to pay higher than usual premiums.This is not what the market wants to see before the September surge starts in earnest. The coming weeks are going to be packed with deals, and in an ideal world, borrowers would be going into this frenetic period knowing that order books are bulging and premiums are thin.Meanwhile, in the CLO market, spreads are nearing their magic number. With spreads tightening around 25bp, and CLOs that priced last year taking the defensive measure of adding short non-call periods, a handful of CLOs are already looking to take advantage and reset their deals to a tighter spread.However, for more CLOs to join the trend, spreads need to tighten by a little more. But once that happens, it’s off to the races for resets, and the market can expect to see a deluge of repricings in short order.

Central Africa’s Gabon did what no other African sovereign has done this week when it completed a debt-for-nature swap which included the first ever blue bond from the African continent.But the deal did not come without its intricacies, as the sovereign got an insurance from the US Development Finance Corp, meaning that the usually Caa1/B- rated country was now selling Aa2 rated debt.It took a couple of attempts to get the deal right, after the sovereign postponed the deal last week because of rates volatility. We delve into what it took to get such a deal over the line.Meanwhile, the FIG market is going full guns blazing with multiple deals pricing this week. One of the standouts was an Additional Tier 1 trade from BNP Paribas in dollars, the first such deal in the currency since Credit Suisse sent shockwaves through the AT1 market on its collapse.