Covered Bonds

Landesbank Berlin’s Eu1bn three year public sector Pfandbrief issue was performing well in the aftermarket today, after having come at the tightest level of any jumbo so far this year. Meanwhile the bank was also pleased to report the success and pricing level of the first German structured covered bond.

Around Eu3.5bn of orders within one hour for Landesbank Berlin’s three year jumbo public sector Pfandbrief this morning allowed the bank to achieve pricing at the tight end of its mid-swaps flat to minus 1bp range, making it the first benchmark covered bond to be priced inside Libor this year.

After the success of Landesbank Berlin’s public sector Pfandbrief issue this morning, other issuers are eyeing the primary market, hoping that the jumbo will not prove a one-off. However, LBB’s deal could be the exception rather than the rule, if some investors are to be believed.

Given the torrid conditions at the end of 2007, supply could have been a lot worse than the Eu17bn of jumbos that were launched in January. But the figure still leaves the market lagging the rate required to hit many full-year forecasts. The Cover spoke to analysts to see if they are rethinking their estimates.

DnB Nor Boligkreditt will soon be joining the throng of international issuers touting registered covered bonds to German investors. However, the Norwegian issuer is already enjoying an embarrassment of riches in the private placement market after selling its Eu2bn five year benchmark in mid-January.

Deutsche Apotheker und Ärztebank eG has confirmed its intention to enter the jumbo covered bond market, although its debut is still some way off, according to the bank. Initial expectations that the bank would issue in the second quarter may be frustrated.

Will the Packmohr Plan be the new Gold Standard for market-making? Can anyone identify the lone voice lamenting the decline in traditional values? And does anyone really care who is number one in the league tables so early in the year? All is revealed by our master-hacker in The Blackberry Chronicles.

UK chancellor Alistair Darling last night renewed the government’s backing for the country’s planned regulated covered bond framework in a speech to the EEF Manufacturers Biennial Dinner in London.

CIF Euromortgage has today (Thursday) begun roadshowing a new registered covered bond programme with arranger Landesbank Baden-Württemberg, joining the growing ranks of international issuers keen to take advantage of a market that German issuers have long tapped through Namenspfandbriefe, which account for around one-third of Pfandbrief supply. The sector was also recently joined by a first cédulas issuer.

The primary market’s calm this week has come as no surprise, but bankers are looking for clues to future activity and BankInter is regarded by some as having the necessary strength to reopen the Spanish market, with the multi-sellers finding little favour in the current market.