Germany’s constitutional court ruled against reallocating the unspent money borrowed during the coronavirus pandemic for the energy transition, which will affect government plans. The constitution places limits on government borrowing. The pandemic allowed emergency borrowing, but using that money now for other purposes is unconstitutional.

How soon will the ECB shrink the €1.7 tln stash of bonds it bought during the pandemic (the PEPP)? It is already selling bonds from the larger portfolio amassed during the 2015 fear of deflation. Around €18 billion a month come due under PEPP. Some experts expect the ECB to announce in December that reinvestments will be lowered as early as March.

Pension funds are resisting a UK government push to invest up to £50bn in projects and business to support economic growth, citing lack of suitable investment opportunities and concerns about higher risk. They want tax free dividends on investments in UK companies and call for the government to ensure a stream of “high quality” investment assets.

The bank was sitting on $105.8 bln of losses on a $614 bln portfolio of mostly agency mortgage securities. Rising rates have translated into a decline of about 3% in the value of agency mortgage securities. The held-to-maturity portfolio was valued at less than 85 cents on the dollar. The overall portfolio has a weighted average life of about eight years.

Investment-grade borrowers have sold $12 bln of convertible bonds this year, more than 30% of total issuance. Convertible bonds can be swapped for equity if a company’s shares rise to a specific price. They allow companies to borrow at 2-3 percentage points cheaper rate than a traditional bond. The market used to be dominated by junk-rated companies.

After the government's changes to climate policies, it sold £3 bln of bonds due 2033, with a demand 2.56 times as high. The difference between the yield at the weighted average price and the lowest accepted price (a.k.a the tail) was 1.3 basis points, up from 0.2 in the previous sale. That suggests the UK had to accept a concession to sell the bonds.

The state, which renationalised EDF, is at odds with boss Luc Rémont, particularly over the way nuclear power prices are regulated, just ahead of its biggest reactor construction programme. EDF has net debt of €65bn with annual spending needs of €25bn per year, up from €16bn-€17bn in the past, and which EDF does not want to finance with more loans.

Long-term bonds sold during pandemic hit hard as rates soar. They have the highest price sensitivity to changes in interest rates. A 30-year US Treasury bond sank below $0.50 on Monday. Among investors are ETFs, pension funds and insurance companies. Of course, a slide in interest rates would cause their prices to rise and turn these bonds into winners.

Trillion-dollar green finance targets of leading investment banks are driving a boom in “sustainable” debt. The FCA in the UK warned banks over “greenwashing”. Bank of America structured $500mn of “blue” bonds for the state of Gabon, but the bank said it could not guarantee that the description complied with sustainable investing standards.

US corporate bond maturities fall to the lowest in a decade. Investment-grade yields are at 6% and near-term bonds yield more than longer-dated bonds. Companies hope that rates will have fallen when they need to refinance. Some investors prefer high yields of shorter-term debt, while long-term investors such as pension funds prefer to lock-in higher rates.

The UK pension funds and insurance companies have £5tn in long-term assets, but they have no appetite for long-term investment in productive capital. Millions of people in the UK will retire with an inadequate pension. Compared to other countries, the 8,200 UK pension funds are more numerous, have higher costs and a narrower asset allocation.

Equivalent to around 5% of Belgian bank deposits. The bond sale was designed to compete with bank deposits to force banks to raise interest rates. More than 600,000 Belgians signed up for the one-year notes which earns 3.3%, while one-year term deposits earn 3.13% on average. This may influence the financial stability of some banks.