Covered Bonds

The Cover understands that Shinsei Bank is delaying its covered bond issue, the first from Japan, until at least April in light of the volatile market conditions. However, the bank is understood to be keen to return to the groundbreaking project when market conditions improve.

Depfa Deutsche Pfandbriefbank has opened books on a five year benchmark sized Pfandbrief, with the public sector lender finding conditions more appropriate for issuance through its German arm than its Irish ACS unit.

Landesbank Baden-Württemberg has priced only the second sub-Libor deal to hit the primary market this year. The Eu1.5bn five and a half year public sector covered bond was re-offered at 1bp below mid-swaps yesterday (Wednesday) afternoon, buoyed by high redemptions of Pfandbriefe that contributed towards an order book of more than Eu5bn.

OTP Mortgage Bank successfully priced the first jumbo covered bond from Hungary yesterday. Leads ABN Amro and Deutsche Bank said that the deal had gone well and was continuing its strong performance in the secondary market.

Landesbank Baden-Württemberg launched a Eu1.5bn five and a half year public sector covered bond this morning that will be priced at 1bp through mid-swaps later today – the same level at which the German bank priced a Eu2bn five year deal in late September.

From Heidelberg to Holborn, the search goes on for a conductor able to unite the covered bond community in sweet harmony. Unfortunately, discord prevails and some of the worst affected issuers walk out. Our master hacker was there to transcribe the whole score.

Hungary’s OTP Mortgage Bank reopened the primary market this morning with a Eu1bn two year deal that is the first jumbo from Hungary. The issue was oversubscribed by lunchtime at the wide end of the 60bp-65bp over mid-swaps guidance.

The dislocation between credit news and secondary market spreads was highlighted last week by Standard & Poor’s upgrade of Banco Bilbao Vizcaya Argentaria from AA- to AA and Fitch’s downgrade of Düsseldorfer Hypothekenbank to the brink of junk. But this was just one of several clashes between perception and reality identified by analysts at the Marcus Evans covered bond conference late last week.

Soledad Nuñez, director general of treasury and financial policy for the Kingdom of Spain, said yesterday (Thursday) that she hoped to begin the public consultation on the secondary regulations supporting the update of Spain’s cédulas framework by the end of this month. She also decried what she said were misrepresentations of the country’s economic health, in particular the Spanish banking system’s supposed heavy reliance on the European Central Bank for liquidity.

Millennium BCP has mandated Barclays Capital, Deutsche Bank, Millennium Investment Banking and Natixis for a jumbo issue to be launched after a roadshow. Meanwhile OTP Mortgage Bank is sounding out the market for a two year deal through ABN Amro and Deutsche Bank at 60bp-65bp over mid-swaps.