When will investors tire of European corporate bond issuance? Against the backdrop of another rampant start to the year, it is hard to find a banker prepared to place a bet on when demand will dry up. And for as long as it does not, supply will rush to meet it.
March 13 alone saw nearly €5 billion of issuance in Europe, most of which illustrated the theme of the year so far – investors seemingly chasing everything on offer, no matter that spreads are at historically tight levels, for fear of missing out ahead of an expected change in the rate environment later this year.
And even though debt capital markets bankers this year have been playing their old game of starting deals eye-catchingly wide and then tightening sharply into pricing that offers thin or no new issue concessions, investors are hardly signalling their frustration with it. In fact, they are helping to drive it.
Everything looks wide open. Real estate names are finding support, corporate hybrids are back – and in the world of financial institutions, even bank additional tier-1 (AT1) deals are snapped up, barely a year on from when the collapse of Credit Suisse and the debacle around its own AT1s was prompting some to predict the death of that market.
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