Covered Bonds
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ESG deals show there is more to labels than just saving on spread -
◆ Sterling covered bond follows AT1 and senior deals in US dollars ◆ Latest trade is the tightest Sonia covered of 2025 ◆ Comes amid visible recent performance in the asset class
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◆ 'Rocking' book over 4.5 times covered ◆ Slim premium leaves room for performance ◆ Austrian undersupply supports demand
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No 'pronounced' pick up to Austrian national champion names expected
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◆ What is pushing CLO mezz wider ◆ FIG pre-funding underway ◆ What happened at the World Bank/IMF Annual Meetings
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No investors involved in Caffil's latest deal mentioned concerns over French risk
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Issuers' desire to put covered pre-funding to one side suggests concerns over bumps ahead
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Deal expected to be priced after multi-week marketing period
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◆ First senior preferred in two years ◆ 3bp of concession ◆ Senior spreads 'really tight' versus covered bonds
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Absence of new bonds to help secondary spreads grind tighter
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Five and 10 years more appealing, with ultra-long spreads deemed 'rather costly'
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◆ Sterling covered market on a 'hot streak' ◆ Strong demand pledged, including international interest ◆ Offshore sterling covered spreads compress
