Covered Bonds

Dexia Municipal Agency has opened the books on a seven year euro benchmark in the first test of demand beyond the short end of the curve since covered bond issuance picked up again early last week. And another French issuer is set to follow the obligations foncières with its own seven year issue soon.

Hypo Real Estate International’s Eu1bn two year mortgage Pfandbrief earlier this week showed the new realities facing German issuers today, but the issuer yesterday (Wednesday) told The Cover that it was not unduly concerned about the situation. Meanwhile, the HRE group is being courted by a JC Flowers-led consortium.

Norway’s Terra Boligkreditt is launching its first covered bond in euros, adding yet more Norwegian supply to the market. Sweden’s SEB has mandated banks for a new issue, but is expected to hold off until next week.

Iceland’s new covered bond legislation, which came into force last month and was made available in an unofficial English translation by the Icelandic Financial Services Association yesterday (Tuesday), makes provision for four different types of collateral, includes no special bank provision, and does not yet give a minimum overcollateralisation level.

Hypo Real Estate International (HRE) priced a Eu1bn two year Hypothekenpfandbrief yesterday (Tuesday) afternoon at 9bp over mid-swaps on the back of a book dominated by domestic accounts, taking the first steps to locating the new space occupied by German mortgage backed deals.

The Federal Deposit Insurance Corporation’s draft covered bond policy statement proposes that covered bond issuance be limited to 4% of an issuer’s total liabilities, but raises the prospect of allowing greater issuance if higher insurance premiums are paid. It also plans to exempt covered bonds from the full 90 day stay on payments in the event of bankruptcy, but in a way that would not completely remove the possibility of delays.

Nordea Hypotek priced its Eu1.5bn three year new issue yesterday (Tuesday) afternoon, with the leads declaring that the issuer could find encouragement in where it had priced against other recent mortgage backed deals.

The Federal Deposit Insurance Corporation today put forward its interim proposals for a policy statement on covered bond issuance in the US, inviting comment on a 4% limit of covered bond issuance to total liabilities and a 10 day repudiation period.

Sweden’s Nordea Hypotek opened the books on a new Eu1.5bn three year deal this morning, with initial guidance of the 12bp over mid-swaps area. The price has been fixed at 11bp over mid-swaps after leads BNP Paribas, HSBC, Nordea and UniCredit received Eu2bn of orders.

Finland’s OP Mortgage Bank has joined the queue of issuers planning to tap the market, but is content to wait its turn rather than push to the front. Meanwhile an issuer further down the queue has moved to the back, another has denied it was ever lining up to issue, and a third is keeping its debut to itself.