Deutsche and Bankia reveal polarising market
The supply-starved covered bond market highlighted its increasing credit polarisation this week with both its tightest and widest deals of the year. 2012’s lowest rated covered issuer, Spain’s Bankia, got an inaugural public transaction away at 290bp over mid-swaps despite recent Cédulas downgrades, while rare issuer Deutsche Bank attracted more than €2bn of orders in under an hour for what bankers described as a "cheap Bund" at 22bp over.
Both top tier and peripheral names are benefiting from a lack of euro benchmark supply, down 25bn on last year, bankers said. Others, including lower tier issuers from Italy and Spain, could now follow even after missing the LTRO II cut off.
But though the covered market has
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