The rebound is even more marked for the secure obligations

After an explosive start of the year, emissions of debt of financial institutions have suffered a coup held in may, in a climate of concern about the exposure of banks to the European State loans. A market thawing begins, as evidenced by the flow of the last days, on the "covered bonds" segment, but also on the more conventional debt to banks ("senior").

In this last category, BNP Paribas, ING, BPCE, Nordea and Rabobank have been under the spotlight last week. Friday, the market welcomed a show of BNP Paribas, maturity 3 years EUR 250 million, variable rate (Euribor 65 basis points, according to market sources). BPCE for his part raised 600 million in 18 months at a rate Euribor 65-67 basis points and Nordea issued 1 billion of titles in three years, Euribor 75 basis points. "These emissions are variable rate, and with significant bonuses and very short maturities, but the signal is still positive in view of the volatile market environment", says Jeroen van den Broek, at ING.

The volume of debt "senior" issued by the banks of the euro area in June therefore exceeds may: it represents more than 18 billion euros, against 7 billion last month, according to Thomson Reuters.

The rebound is even more marked for the "secure obligations". And because, they are supposed to offer a double protection, in particular because the "banks take responsibility for their refund" (1). "Many institutional in crave", recognizes Philippe Berthelot, at Natixis AM, while recalling the existence of a mortgage risk in these titles. It is this component that had brought them to be deserted during the crisis of the "subprime". "The purchase of"covered bonds"program put in place by the European Central Bank (ECB) last year boosted the market, but volumes not yet match those of mid-2007", Notes Manager. Issued amounts to almost EUR 12 billion in June, against 3 billion in May. Among prominent operations, RBS has come for the first time in this market, the week last with an amount of EUR 1.25 billion and a coupon of 2.75. The operation has been over-subscribed.

Large refinancing needs

The climate is therefore to improve. Indeed, on the market of CDS (credit default swaps"), the trigger was sensitive last week: up to 200 points, financial Itraxx index dropped to 170 points Friday. Moody's has reassured by declaring that major European banks have the means to absorb the losses related to their exposure to Greek, Portuguese, Spanish and Irish markets.

This year, given their major refinancing needs access to the debt market is crucial for banks. However, a study of Morgan Stanley shows that major European institutions have already achieved 65 of their funding ("senior"), which means that they are in advance than in previous years (the average is 50 between 1999 and 2009 for the same period). According to Morgan Stanley, the risk of saturation of the primary market by banks must also be put into perspective the fact that they are making efforts to reduce their footprint and take cash to the ECB. In addition, several banks are making private placement or the transactions to the general public.