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BCP pays 1.84% per annum on 500 million social bonds. Demand increased by 1.5 times – Markets

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BCP pays 1.84% per annum on 500 million social bonds.  Demand increased by 1.5 times - Markets

BCP raised € 500 million in the first issue of the bank’s social debt. The yield was 1.84%, down from the original forecast due to strong demand. This is the first operation of its kind to be conducted by a bank led by Miguel Maya and the second by a Portuguese financial institution in the ESG (Environmental, Social and Corporate Governance) segment.

On Monday, the bank, headed by Miguel Maya, began a survey of investors to assess their appetite for issuing social security securities. Following the road show, the 6.5-year bond placement (and the early call 5.5 years later) was closed on Wednesday.

The issue was closed at a premium of 200 basis points to the average euro swap rate, which trades at -0.164%, bringing the final yield on these bonds to 1.842%. The price was 99,527, coupon rate 1.75%.
This fixed interest rate is applied for the first 5.5 years and then the interest rate will depend on the amount of the three-month Euribor with a 2% spread.

The benchmark coupon has been down all morning since the initial forecast 215-220 basis points above the average euro exchange rate with the same maturity of -0.12%. This downward revision of interest will be associated with strong demand, which exceeded 725 million euros (in other words, 1.45 times higher than supply).

The issue is classified as a priority social debt and was placed among institutional investors. Thus, these bonds comply with the MREL regulatory requirements. And the goal is to fund or refinance social assets classified by ESG criteria.

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“The amount equivalent to the net proceeds from the issue will be used as a priority for financing and / or refinancing loans provided by the bank through covid-19 lines, in accordance with the terms of the bank of green, social and sustainable bonds. as a clear demonstration of the commitment made by BCP Millennium to support the economy, in particular by financing the micro, small and medium-sized companies most affected by the recent pandemic, ”he said in a statement.

This makes BCP the second Portuguese bank to issue ESG debt, after Caixa Geral de Depósitos, the first national bank to issue sustainable bonds two weeks ago. At the time, the state bank issued EUR 500 million up to six years with a final rate of 0.4%.

The BCP operation involves six investment banks (Barclays, Credit Agricole, JPMorgan, Millennium BCP, Natixis and Unicredit). “The operation that followed the successful roadshow was carried out with the participation of a very diverse group of European institutional investors, many of whom are committed to investing in ESG, reflecting on the one hand the market’s confidence in the Bank and on the other hand , recognizing Millennium BCP’s commitment to sustainable financing, ”he adds.

(News updated at 7:20 pm with BCP comments)

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Economy

Europe plunges into the Red Sea. Oil rises as euro falls against dollar – Markets in a Minute

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European markets are in the red.  Interest on Portugal's debt hits 2.5% - Markets in a minute

Europe is optimistic about the beginning of the session. Shell spends energy in anticipation of marginal losses

Europe was full of optimism and started the session in positive territory after finishing the session in the red on Wednesday. This week was particularly volatile as investors anticipated signs of tight central bank monetary policy going forward.

Stoxx 600 adds 0.39% to 400.45 points. Among the 20 sectors that make up the index, losses are controlled by energy. European stocks in this sector were tainted with bad news from Shell.

Shares of the London-listed oil company tumbled 3.93% after the company this Thursday expected refining margins to fall from $28/bbl in the second quarter to $15/bbl between July and September. On the other hand, travel, leisure and retail lead the way.

Elsewhere in Europe, Madrid added 0.33%, Frankfurt 0.52% and Paris 0.31%. Amsterdam is up 0.34%, while London is trading at the waterline (0.07%). Milan goes against the trend and loses 0.29%. Here PSI follows the trend and rises by 0.29%.

In a major market move, Credit Suisse rose 3.2% after JPMorgan Chase revised upwards its Hold recommendation. In turn, Imperial Brands shares rose 4.3% after announcing a share buyback program of up to £1bn (around €1.14bn at current exchange rates).

European equities are enjoying a particularly volatile start to the fourth quarter as investors weigh in on central bank monetary policy and a slowdown in macroeconomic data, while short sellers retreat after betting on a decline in Old Continent-listed securities. .

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The banking sector, which is more sensitive to changes in interest rates, and technology, which mainly consists of growth stocks, which are more sensitive to changes in monetary policy, will be the sectors most followed by the market during the session, as the ECB publishes reports from the latest monetary policy meeting. – a credit policy on which direct interest rates were raised by 75 basis points as never before.

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Economic situation ‘will get worse before it gets better’: IMF director warns

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Economic situation 'will get worse before it gets better': IMF director warns

Kristalina Georgieva admits that the war in Ukraine violated the forecasts of the International Monetary Fund

The Director General of the International Monetary Fund (IMF) said on Thursday that the global economic situation, aggravated rising inflation “it will still get worse before it gets better”, acknowledging that the invasion of Ukraine undermined the organization’s predictions.

Speaking at Georgetown University in Washington DC, Kristalina Georgieva said he thought the situation would “get worse before it gets better”.

“Uncertainty is very high,” he said, highlighting the effects of the war, noting that the pandemic “hasn’t gone away yet” and adding that “the risks associated with financial stability are growing.”

The IMF’s director-general said the organization had again lowered its forecasts for the global economy in 2023, projecting four billion euros of lower economic growth through 2026.

Georgieva also revealed that the institution had already cut its global growth forecast three times and now expects 3.2% this year and 2.9% in 2023.

The IMF Director General said that the situation could be resolved by three priorities for the economies, calling, firstly, for measures to reduce inflation, preventing it from “fixing” at current levels. However, these efforts must be balanced, he said, because otherwise they could plunge “many countries into a protracted recession.”

“Central banks must continue to respond,” he said, “even if the economy slows down.”

The second priority, Georgieva said, includes fiscal measures that protect “the most vulnerable families and businesses,” warning that these measures must be “very targeted” and urging countries “not to subsidize the rich.” The IMF Director General also warned of the negative effects of universal price controls.

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Finally, Georgieva stressed the importance of supporting emerging market and developing countries.

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Economy

Banco de Portugal is revisiting high inflation this year to 7.8%. The economy grows until the end of the year, but will stop in 2023

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Banco de Portugal is revisiting high inflation this year to 7.8%.  The economy grows until the end of the year, but will stop in 2023

The Bank of Portugal revised upwards by 1.9 percentage points (pp) its inflation forecast for this year to 7.8%, the highest since 1993, reflecting growing external pressure on prices.

In its October economic bulletin released today, the Bank of Portugal (BdP) predicts that the harmonized consumer price index will hit 7.8% this year. upward revision from 5.9% forecast in Junebut still below the eurozone.

The regulator explains that inflationary pressures remain high in the second half of the year despite some signs of easing, which it estimates will see the rate stay above 9% during this period, peaking in the third quarter (9.9%) . 5%) and slightly reduced by the end of the year.

On the economic front, the BdP improved its growth outlook by 0.4 percentage points this year. to 6.7%, signaling a recovery from pre-pandemic levels in the first quarter but a subsequent slowdown that will be reflected in 2023.

In the October Economic Bulletin, released today, the organization, led by Mario Centeno, presents only forecasts for this year, but points to the impact of the slowdown in economic growth for 2023 recorded from the second quarter onwards.

“The negative effects of Russian military aggression in Ukraine have intensified over the course of the year, which suggests a relative stabilization of activity from the second quarter onwards. These effects will be more pronounced in 2023, foreseeing a significant slowdown in growth compared to 2022, with a domino effect of over 3.9 p.p. [pontos percentuais] up to 0.5 p.p. ”, it can be read.

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However, for this year, the growth forecast for gross domestic product (GDP) has been revised upward by 0.4 percentage points. up 6.7% from June, with the Portuguese economy “benefiting from a recovery in tourism and private consumption”.

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