Natixis CIB notches up a record year on the primary bond market

Despite a challenging environment and a volatile primary bond market, Natixis bolstered its positions on this segment in 2021. Gabriel Lévy, Global Head of Debt Capital Markets at Natixis Corporate & Investment Banking, looks at the factors driving this momentum on the primary bond market.

How did the bond market perform across the various segments in 2021?

Bond volumes issued by companies on the market declined significantly in 2021, plunging 45%, primarily in France, Italy and Spain after record issues in 2020. On the financial institutions segment, the year ended with a 10% jump in issue volumes across all instruments. While issue volumes deteriorated on these two segments in the first half of the year, activity on the primary bond market picked up in the second half, primarily due to a recovery in economic activity, as well as the emergence of new risks i.e. supply difficulties for manufacturing (bottlenecks for semi-conductors in particular), and pressure on commodities prices with concerns of a lasting resurgence in inflation.

Expectations of a reduction in central banks’ quantitative easing programs (end of the PEPP or pandemic emergency purchase program, along with the nearing first TLTRO maturities, or targeted longer-term refinancing operations) prompted financial institutions to take a more active approach on the least costly funding instruments, such as covered bonds and senior unsecured debt issues.

On the sovereign, supranational and agency segments, volumes remained solid despite a slight dip of 8% vs. a record year in 2020, as a result of States’ support measures for corporations and the implementation of European Union funding programs i.e. SURE, then Next Generation EU.

How is Natixis CIB positioned on this growing bond market?

Natixis outperformed in each of its business line’s three segments in 2021 and recorded its best year ever.

How has Natixis CIB stood out against competitors over recent years?

Our value added on the primary bond market lies on the one hand in our distribution capabilities, which are recognized by issuers, and on the other in the expertise we have developed for our clients over recent years on a range of topics i.e. regulatory aspects for financial institutions, insight into ratings agencies’ methodologies for financial institutions and corporates, tried-and-tested expertise in supporting our clients’ strategic challenges such as the environmental or social transition, as well as Debt Liability Management techniques. We consistently deliver a tailored solution to each client, reinforcing our strong position on this market.

What is your view on the market outlook for 2022?

The credit markets could experience phases of uncertainty and volatility in 2022, with the risk of inflation and rising interest rates, risk of widening credit spreads, resurgence of new Covid-19 variants, deferral in central banks’ monetary policy, end of PEPP and new TLTRO in Europe, etc.

Covered bond issues are expected to rise to €120-130bn after two years of more sluggish issue volumes below or equal to €100bn, ahead of maturity dates for the TLTRO program launched and extended by the ECB since 2014.

Meanwhile corporates will need to refinance part of the debt they took out on the bond market during the pandemic. Additionally, M&A activity was particularly robust in 2021 – partly due to the postponement of transactions planned for 2020 – so deals conducted in 2021 will also need to be refinanced on the primary bond market in 2022, thereby underpinning primary activity.

Meanwhile the sovereign, supranationals and agencies market (SSA) looks set to be active following on from the measures to prop up the economy in 2020. The emergence of new Covid-19 variants could also prompt these issuers to rely more heavily on the primary market.

Landmark transactions:

Natixis was involved in a range of bond issues in 2021:

  • SAUR: First French group in its sector to issue a sustainability-linked bond (maiden bond of €950m)
  • BPCE: Financial subordinated issue - RAC Tier 2 dual tranche - of €1.75bn
  • European Union: 8-year and 25-year dual tranche issue of a total of more than €14bn
  • World Bank: €2bn 40-year Sustainable Development Bond



TLTRO: Targeted Longer-Term Refinancing Operations is the European Central Bank’s long-term lending program for banks in the euro area.

Quantitative easing: monetary policy tool aimed at combating the risk of deflation and recession.

Green bonds and social bonds: bond issues that finance activities with an environmental or social impact.

Sustainability-linked bonds: bond issues where the coupon is linked to a range of KPI that the issuer pledges to meet. Failure to comply with these indicators may alter the financial conditions.

Debt Liability Management: management technique that uses assets and cashflows to reduce companies’ risk of loss from not paying a liability on time.

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