◆ A pivotal moment for digital capital markets
◆ Who really benefits from bonds on the blockchain?
◆ FIG M&A in Europe

There is no shortage of evangelists for digital capital markets. But adoption of bonds on the blockchain has been slow, not least because it hasn't always been obvious what problem the tech is solving, or how it can be widely implemented. This week, however, the ECB took a big step forward by launching trials of distributed ledger technology for bonds.

We discuss what the ECB hopes to achieve with this initiative. We also debate whether it will change the face of finance or we know it, will fizzle out into nothing, or something in between. One thing is for sure: everything is to play for at this critical moment in the digitalisation of the bond market.

We also took a keen interest in French president Emmanuel Macron's opinion this week that there is a need for consolidation among the EU's banks. Is big bank M&A on the agenda, and if so which firms? We also look into the likelihood of it happening as well as the pitfalls and benefits.

◆ Etihad to lead fleet of airline listings as IPO market and aviation sector blossom
◆ Air Baltic's historic coupon
◆ Open season for bank AT1s

An airline IPOs are a rare bird. In the last nine years, there have been three. The industry has rebounded from Covid, however, as UAE carrier Etihad's results proved this week and now it and at least eight others are looking to list on stock exchanges this year, or next. We look at what is driving them to the equity market and what reception they will likely find when they get there.

One of those airlines is Air Baltic. It was in the bond market this week raising €340m of five year debt, callable after two, at a cost of a whopping 14.5%. We look into the airline's capital markets strategy.

Meanwhile, banks piled into the additional tier one capital market this week. We examine how they managed to cram so much issuance into such a small window at such tight pricing.

◆ Sustainability-linked bonds lose appeal...
◆ ... as do the loan versions, come to think of it
◆ The favourites to take over from Quinn at HSBC

When Enel missed a KPI on its sustainability-linked bonds, it could have marked a moment of maturation for a youthful product but issuance volumes are plummeting.

Meanwhile, the international banks that lend to Turkey's financial institutions seem to prefer to make green loans rather than the sustainability-linked versions they made previously.

We ask what is going on with sustainability-linked products — does all of this signify the last rites for an asset class that was supposedly so well-suited to funding the green transition?

Meanwhile, Noel Quinn caused a surprise this week by announcing his plans to retire from HSBC, where he is chief executive. We look at who might replace him, and we think we've identified a clear favourite.

◆ The 'marginal madate': it seemed like a good idea at the time
◆ GlobalCapital's new columnist, Craig Coben
◆ World Bank boosts lending capacity

What do you do when that mandate you accepted in a quiet market to keep busy is still lurking about, taking up time and energy, when the market has picked up and juicier deals are to be done?

Is extending balance sheet to clients as a second tier firm when the top tier won't anything other than an exercise in futility in the long term?

GlobalCapital's new columnist and capital markets veteran Craig Coben joined us to discuss these very matters and more.

Meanwhile, we have an update on the fast developing situation with the capital of multilateral development banks, the not so secret weapon in their campaign to increase their lending to the developing world.

Also, hear from our sponsors, KfW, about their latest advance into blockchain-based digital bonds.

◆ Supranationals speak on callable capital
◆ Bank funding: pricing reset
◆ The demise of the cornerstone investor

As the great and the good of the development finance world gathered in Washington, DC for the World Bank/IMF Spring Meetings, multilateral development banks published details about their callable capital, the next vital step along the way to powering up their lending to solve some of the planet's most urgent problems. We digest what they said and why it matters.

In the FIG bond market, issuers decided to postpone new issues as rates volatility gripped the market. We figure out when they will be back and how much extra they will have to pay for the funding.

Finally, equity capital market experts think the IPO revival is strong enough to do away with cornerstone investors. And what do the cornerstones think of that? Listen in to find out (spoiler alert: they're not exactly tearing up the paving stones over it).

◆ Why everyone from nuns to pro-coal US state treasurers are giving banks stick over ESG
◆ El Salvador's punchy new debt structure
◆ Appetite for duration in covered bonds

West Virginia: almost heaven unless you're on state treasurer Riley Moore's list of banks the state won't do business with over fossil fuel financing. But unlike most ESG-related exclusions, in this case opprobrium is reserved for financial institutions deemed to be anti fossil fuel.

Bank of Montreal has dodged making the list in a week where four others were added. But the pressure on banks to behave a certain way over ESG is mounting on both sides with some nuns in the US taking Citi to task over what they see as exploitation of indigenous people.

We look into what this means for banks picking a treacherous route to building their ESG credentials while trying to make money serving traditional clients. We also examine what investors in their bonds think.

Investors had another tricky consideration to make this week as El Salvador issued a funky new structure as it looks to beat its debt distress. We examine the new bonds and what the market reaction to them.

Finally, we discuss the growing appetite for long dated covered bonds.

◆ Do investors want unified capital markets coverage?
◆ Corporates fear democracy
◆ Why are FRNs trending?
◆ Second lien mortgages in arrears ― yes please

Banks’ urge to cut costs in debt capital markets, especially syndicate desks, is prompting some to call for the ‘global capital markets’ model: one team for equity and all kinds of debt.

They argue this could heal banks’ disjointed thinking and allay investors’ frustration that they have to say the same thing to five different bankers at every firm. But there are plenty of sceptics...

Few in the corporate bond market expected its rally to last into this year, still less the second quarter. But here we are and it’s still running. A motley bunch crammed into the market this week and found a great reception. As Mike Turner explains, they’re partly packing the funding in to avoid this year’s great big risk event: the US election.

Floating rate notes are the natural product for banks to issue, but normally they don’t much, because most investors prefer fixed rate bonds. So why are investors gagging to buy floaters now, just when everyone agrees interest rates are about to fall? Sarah Ainsworth goes through the ins and outs.

Second lien mortgages are the kind of — shall we say 'challenging' — collateral familiar from the US securitization market, but as George Smith and Victoria Thiele highlight, the UK has produced four deals in the past five months. The latest, from Equifinance, had some pushback in the market, but investors were only joshing and bought it in the end. We ask if lower ranked mortgages are the hot new asset class.

In the second part of GlobalCapital’s exploration of how bond syndicate desks are changing, after a swathe of the discipline’s senior bankers have been made redundant, we discuss the syndicate job itself.

Technology and market transparency have stripped away some of the grunt work, but also made knowledge easier to come by. Are banks thinking they don’t need so much experience on desks?

Bankers admit pricing bonds has often become more routine. But when markets get difficult, or situations do, as with Equinix’s recent pulled deal, you need experience.

We also talk to Ana Fati and Mike Turner about the latest plunge down for Thames Water after shareholders refused to put in much needed equity. What are bond investors and lenders thinking about the UK water sector?

And it’s been a huge week for African bond markets, with Zambia finally getting its official creditors and bondholders to agree to a restructuring. This one is meant to be tougher to bondholders, but if Zambia does well economically, it will have to pay extra. George Collard explores whether that is a good thing, or will prove a burden.