Santander, Intesa join eurozone bank funding thaw

A long-awaited thaw in funding for eurozone banks has spread to troubled southern countries after Santander followed Italian rival Intesa to raise cash, further evidence that central bank action to head off a crisis is restoring confidence.
Urged on by banks, the European Central Bank (ECB) provided almost half a trillion euros of ultra-cheap, long-term cash in December, and the prospect of more to come has given investors an appetite to invest and banks the confidence to issue.
"The national champions in all peripheral markets can now issue," said Torsten Elling, co-head of rates syndicate at Barclays Capital.
"The question each borrower has to ask themselves is whether economically it looks attractive and makes sense...The improvement seen throughout January meant that if they need to fund the market is now open."
Santander, the euro zone's biggest bank, raised 2 billion euros from the first Spanish covered bond in over eight months on Wednesday and paid less than expected to do so, thanks to strong demand.
That followed hot on the heels of a 1.5 billion euro bond issue by Intesa Sanpaolo's on Tuesday, the first unsecured issue by an Italian bank for eight months.
Those deals were underpinned by a fall in borrowing costs for Italy and Spain and improved confidence in the health of their sovereign bonds, despite lingering fears of a deep recession.
That's the result of the ECB's 489 billion euro injection of 3-year funds to 523 euro zone banks, leaving a record amount of excess liquidity in the banking system.
It has helped inspire a lively start to the year for issuance, with European banks raising $28 billion from covered bonds in January and $36 billion from unsecured debt, both the highest monthly tallies since May, Thomson Reuters data show.
But until Intesa most of the deals were from the stronger countries of the Nordic region, Britain, Germany, Switzerland and the Netherlands.
Santander's three-year covered bond deal will price later on Wednesday but was expected to be sold at 210 basis points over mid-swaps, lower than the 230bp initially expected, after attracting demand for more than three times the offer.