In a new series, John Orchard talks to bond issuers and their intermediary banks about corona-driven borrowing programmes and their market reception.
How are capital markets handling the corona crisis? Against the backdrop of extraordinary measures bringing forth considerable new government borrowing and gigantic volumes of central bank bond buying, OMFIF spoke to two sovereign-backed agency issuers in the market with Covid-19 related transactions. The European Investment Bank, a key component of the plan agreed on 9 April by the Eurogroup, and the Council of Europe Development Bank, raised €1bn each last week with slightly negatively-yielding bonds (CEB, EIB) that met record-breaking demand. Nevertheless, will the issuance glut render the sovereign, supra-sovereign and agency market disorderly? What will happen to ratings and therefore pricing? How do capital markets work from home? And will corona bonds crowd out sustainability bonds, or are they the same? OMFIF Chief Executive Officer John Orchard discusses these themes with Eila Kreivi, director and head of the capital markets department at the EIB, and Rolf Wenzel, governor of the CEB, together with Frank Scheidig and Marcus Pratsch of DZ Bank, a bookrunner on both bonds.
Read the full write-up: