France: Bayrou, bonds and BPCE

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◆ How French issuers are responding to political ructions 

◆ French corporate, agency, bank and sovereign bonds discussed 

◆ French lender brings innovative European Defence Bond

French prime minister Francois Bayrou's decision this week to hold a confidence vote in his government is likely to be a key influence on European capital markets for the immediate future and possibly beyond.

We discuss how it is affecting the borrowing costs and behaviour of different issuers from the country and further afield — from its agencies and the European supranationals, whose spreads took a hit this week, to its investment grade companies, which did some surprising deals.

We also look at an innovative deal from French bank BPCE. It priced a bond the proceeds of which will finance defence. Rising defence spending will be a huge and controversial topic for the capital markets and society for years to come so we examined whether this new label would be one that will stick, what it can achieve for the issuer and the defence industry, and what we can deduce from the execution given the politically-driven market volatility.