Covered Bonds

“April is the cruellest month,” according to TS Eliot’s The Waste Land, but, having looked dead and buried in February and March, the covered bond market enjoyed a Spring renaissance. As a result, some of the lead managers whose obituaries were being written in the first quarter showed themselves to be alive and kicking.

SEB priced its Eu1bn five year public sector Pfandbrief yesterday (Wednesday) afternoon ahead of today’s continental European holidays. The deal maintained the Pfandbrief market’s “business as usual” attitude after the rescue of Düsseldorfer Hypothekenbank, although the issuer did move away from the retention system used in its last jumbo.

Pfandbriefbank Schweizerischer Hypothekarinstitute - the Pfandbrief-issuing bank for the non-cantonal banks in Switzerland - made its largest single visit to the market on Tuesday. The Sfr1.15bn (Eu709m) multi-tranche domestic deal featured a broad range of maturities in an attempt to capture the attention of the full spectrum of investors after the issuer received regulatory approval for it shortest maturity to date.

SEB AG nipped into the market this (Wednesday) morning before tomorrow’s continental European holidays to launch a Eu1bn two year public sector Pfandbrief. Some Eu1.25bn of orders had been placed by the time the books were closed late this morning.

Deutsche Apotheker und Ärztebank’s mortgage Pfandbriefe have been assigned a triple-A rating by Standard & Poor’s. The rating agency said today (Wednesday) that the first issue off apoBank’s Eu15bn debt issuance programme, of up to Eu1bn, is expected in mid-2008.

Banco de Sabadell’s leads were today (Wednesday) hoping that despite setting a new high of 53bp over mid-swaps, the Eu1.25bn two year jumbo could mark a turning point for the covered bond market, which has been subject to progressively wider primary market levels.

Moody’s today (Tuesday) assigned a provisional triple-A rating to Banco Santander Totta’s covered bond programme. BNP Paribas, Morgan Stanley and UniCredit were mandated as leads back in December, but one banker suggested that first issue could emerge soon.

Berlin-Hannoversche Hypothekenbank (BHH) has priced the first Pfandbrief since Düsseldorfer Hypothekenbank (DHB) had to be transferred to the Association of German Banks’ (BdB) guarantee fund on Monday of last week. As such the deal was a vote of confidence in Germany’s product, but pricing issues still remain.

The Australian Prudential Regulatory Authority (APRA) today quashed fresh appeals from Australian banks and their representatives for it to give the green light to covered bonds. APRA has reiterated its view that the asset class is incompatible with the interests of depositors.

Banco Sabadell is set to price the first cédulas hipotecarias jumbo for more than five months today (Tuesday), a Eu1.25bn two year issue, having attracted orders of more than Eu2.5bn. Investors breathed a sigh of relief as secondary spreads withstood the new issue, even if Sabadell’s peers were digesting the new levels being demanded for cédulas.