As expected, 2020 started with strong market activity and record emissions: in the first week alone, Spanish issuers carried out eight operations. “Between January and February, with some volatility, with well-known events such as Brexit or the US elections, major domestic issuers began to place debt, in a natural move to deal with the year in a comfortable situation”, point from Banco Santander.
But with uncertainty and confinement, the markets stalled for almost two weeks, and by March 18, with the announcement of the ECB’s emergency buyout program, they did not resume activity, marking a new volume. maximum. At the beginning of April last year, Iberdrola reopened the market with a five-year ecological bond, followed by Naturgy, Repsol and Red Eléctrica.
Iberdrola reopened the market in April with a five-year green placement
JP Morgan estimates that, especially in the credit market, secondary sector spreads will end this year unchanged or slightly tighter. “In terms of primary volumes, we expect them to be reduced, after the record year we left behind, as banks and companies start the year with a lot of liquidity.”
Bankia analysts comment that they are convinced “that we will witness a very active new beginning of the year on the bond market, despite the fact that we continue with Covid as a background”.
For its part, Bankinter, which highlights its participation in the largest issue in Iberdrola’s history of 3,000 million hybrid bonds, predicts that, as the best expectations for savings are confirmed, safe haven assets will suffer, and those with higher risk will be favored, as well as with private fixed income and more illiquid operations. “2021 will also serve to confirm the trend of ecological and sustainable bonds.”
Green and social
Barclays highlights the first issue of the Treasury for a 30-year term in February last year of 15,000 million (the largest in the history of the organization and in Spain) and in which he acted as a subscriber and hopes for this year that ESG, which include bonds green, social and sustainable continue to gain more and more and attract new issuers.
HSBC believes that, unlike other years, there is no identified volatility component in 2021: “If it occurs, it would come from what we call unexpected components or so-called queue risks or due to a slower-than-expected economic recovery.” . As 2020 has taught us, the latter events cannot be rejected, but it is reassuring to believe that central banks are determined to act. ”
Banks are very conservative when it comes to financing, Natixis points out: “It will continue in the first half of 2021 and most likely in the second. As for the type of operations, they will be very similar to 2020 ”.
Support for fiscal stimulus, monetary measures and regulatory easing should act as a minimum level of asset prices.
Javier González (BNP Paribas)
Given the environment of low rates and narrow credit spreads, Sabadell expects assets that offer some return to be in high demand this year, so as to increase emissions in the long run (more than 10 years) or subordinated debt. As for the news, “there will be a steady increase in durable bonds.”
Manuel Puig, responsible for debt capital markets for BNP Paribas corporations for Spain and Portugal, predicts for this year that “long-term hybrid and senior operations will be alternatives for issuers and investors”. And Javier González, head of debt capital markets for financial institutions in Spain and Portugal in the same entity, adds: “Supporting fiscal stimulus, monetary measures and regulatory easing should act as a minimum level of asset prices, reducing volatility.”
From Citi, Abraham Douek, head of fixed income for Spain and Portugal for financial institutions, and Bruno Sáenz de Miera, head of fixed income for Spain and Portugal for corporate entities, consider BBVA’s issuance of 1,000 million in green format to be the most innovative. operation of the year. Looking to 2021, they believe that the factor that could create the greatest instability is uncertainty about when and how the ECB will begin to reduce its liquidity.
ING analysts have no doubt: the most successful products on the market in 2020 were those that had a sustainable component; Also in 2021, funding for green projects will continue to grow in Europe, with the post-Covid economic recovery agenda.
Forecasts for 2021
BBVA. “We believe that rates will remain low and that credit curves will remain relatively flat. And we believe that issuers will take advantage of the situation to extend maturities and issue on the long side of the curve. “
Santander. “In Spain, most companies have done their job in 2020, but we expect exciting operations aimed at strengthening ratings through hybrid bond issues.”
Agricultural credit. “Until we can lead a normal life, start spending, travel …, the economy will not recover with the vaccine,” warns Pablo Lladó, director of capital markets. Looking to 2021, he says: “Rates are so low that medium-sized companies may appear for the first time. He would be in search. “
Goldman Sachs. “Central banks will remain active in both the primary and secondary markets. We expect slightly lower emission volumes (15% -20%) than in 2020. This could lead to a worsening of credit levels. “