Deutsche Pfandbriefbank (PBBGR) was the most notable of this week's issues, coming to the market for the first time since January 2023 with a 3-year senior preferred bond. The bond failed to tighten from IPT's, was barely 1x covered and was timed along with the worst of the weeks geopolitical headlines. Reacting to this level the secondary curve widened aggressively. The new issue bond has moved almost 20bps since pricing.
While PBBGR is BBB- and on negative outlook, a much stronger issuer BayerLB issued the following day in the Sterling market and only managed to price 5bps inside its IPT with weak books. It currently trades well wide of similarly rated comps.
New issues that came earlier in the week including Sabadell, HELABA, Banco BPM and DEVOBA all went much as expected. Raiffeisen's AT1, which did come later in the week also priced reasonably decently.
Caixabank had its CMD and its projections were an insight into what we can expect from banks more generally over the coming years. NII was guided to be flat through 2027, with loan volume growth not nearly enough to offset the effect of falling interest rates. Fee income will grow, but so will costs.
Staying with Spanish banks, the windfall tax for banks in the country was extended by 3 years, although only for BBVA, Sabadell, Santander and Caixabank.
Santander UK provisioned £295m for its part in the ongoing UK motor finance issue. We think this is more, proportionally to the size of the loan book, than Lloyds has provisioned. Close Brothers still maintains no provisions are required.
There were also results by Investec, Julius Baer and UNIQA which were all relatively uneventful.
There were a few relevant ratings changes this week Swiss Re was upgraded to A+ by S&P, the move was driven by core balance sheet strength.
Lloyds was upgraded by Fitch to A+. This upgrade really reflects consistently good performance, as well as the groups relatively low risk profile as mainly a mortgage lender and strong asset quality.
Moody's moved Portugal's Macro profile up to strong- which results in upgrades for Caixa Geral (A2), Banco BPI (A2), Banco Commercial Portugues (Baa2), Novo Banco (Baa2), Caixa Central (Baa3), Banco Montepio (Ba1). BCP, Novo and Montepio retain positive outlooks as well.
