Covered Bonds
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The book for a new seven year Pfandbrief from Deutsche Postbank is approaching the minimum Eu1bn size of the deal, with further accounts mulling pricing that pitches the mortgage backed deal close to public sector covered bonds.
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Issuers and their lead managers were treading lightly this morning when soft-sounding new deals, anxiously trying to avoid spooking investors in a market that has seen sliding oversubscription levels after a rash of short dated bonds. But a French issuer could launch a benchmark as early as tomorrow, and more Nordic supply could emerge.
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Landesbank Baden-Württemberg (LBBW) is to begin issuing mortgage backed Pfandbrief alongside its strong presence as a public sector issuer.
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Dexia Kommunalbank’s decision to test the long end of the market proved correct when it was able to price the first 10 year jumbo Pfandbrief in over a year yesterday (Thursday). The Cover spoke to the issuer about its bold move.
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Swedbank is set to price its new Eu1bn three year covered bond this (Thursday) afternoon. However, the deal’s slow progress towards being narrowly oversubscribed was highlighted by some bankers outside the deal, who said that the deal had come too tight to a recent new issue from the Nordic region.
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The market issues working group of the European Covered Bond Council met yesterday (Wednesday) to hear proposals from six companies hoping to set up a new electronic trading platform to enhance liquidity and transparency in light of the problems in the inter-dealer market since last summer.
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Dexia Kommunalbank breathed life into the long end of the covered bond market today (Thursday), pricing the first 10 year jumbo Pfandbrief in over a year. The deal suggests that, even as other jurisdictions appear to be reaching saturation point, the German market continues to benefit from its strong domestic bid.
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Caixa Galicia continued the burst of Spanish issuance when it priced its new Eu500m two year cédulas yesterday (Wednesday) afternoon, but the deal only just crept over the minimum sizes set by the leads. Market participants warned that the decreasing enthusiasm for Spanish deals was demonstrated by the declining trend in order books over the last fortnight.