THE CORONAVIRUS CRISIS has been a wrecking ball for economies and markets. As governments throw money at the problem, however, demand has arisen for the hitherto largely neglected 'social bond' - in this case, Covid-19 response bonds. The debt capital markets (DCM) and sustainability teams at BNP Pari-bas have been very active in the first wave of these surprisingly popular instruments. At the start of 2020, before the health crisis really began to bite, market conditions for sovereign, supranational and agency (SSA) bond issuance were particularly strong, says Jamie Stirling, global head of SSA DCM at BNP Paribas. "Volumes were high, with most issuers ahead of their normal run rate. Then the world changed," he says. As the number of virus-related deaths grew and the national lockdowns spread, the SSA primary market shut down. "There was massive dislocation in the secondary market, where the screens simply didn't reflect reality," he adds. Most SSA issuers remained well funded and were typically 40% done for the year by the end of February, according to Mr Stirling. But debt management offices were waiting for guidance.
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