Covered Bonds

The covered bond market is set to give the lie to the French novelist Victor Hugo’s famous quote that “everything being a constant carnival, there is no carnival left”. Whilst some may be tempted to declare the tumult of the last weeks a constant carnival, issuance in the covered bond market is expected to be delayed by a very real one.

For a market that is not known for its modesty, the European Covered Bond Council’s proposal to introduce a new trading system for covered bonds is most notable for its lack of ambition. However, while it is easy to snipe at the timidity of the representatives charged with taking the product forward, market participants have only themselves to blame for the lack of progress being made.

Compagnie de Financement Foncier priced its first benchmark of the year this morning, a Eu1.5bn three year obligations foncières priced at 3bp over mid-swaps. The Cover spoke to Paul Dudouit, head of funding at CFF, about the issuer’s start to 2008.

With what is traditionally the busiest month of the year out of the way, Deutsche Bank has already gained a clear lead in The Cover’s global benchmark covered bond ranking of all euro and dollar benchmarks.

A global law firm’s HQ at Canary Wharf on a Monday morning? Not exactly our idea of fun, either. But we couldn’t have been more wrong. Some of the market’s hottest properties were on show and, boy, were the covered bond market groupies impressed.

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Lead managers Calyon, HSBC and Natixis have opened books on a new three year obligations foncières (OF) for Compagnie de Financement Foncier (CFF). The deal’s pricing and reception have given further clues to the shape of the new French issuing world, as well as other top notch covered bonds such as Pfandbriefe.

The once-proud name of Hypothekenbank in Essen is taking its last bow with the announcement today that Commerzbank will be merging it into Eurohypo. The disappearance of one of the trailblazers of the jumbo Pfandbrief market was seen as inevitable since last year when Commerzbank made clear its intention to take full control of its part subsidiary and with the resignation of Essenhyp founder and chairman Hubert Schulte-Kemper last March.

Dexia Municipal Agency has priced its long-awaited Eu2bn long five year deal at 4bp over mid-swaps, redrawing the obligations foncières pricing map and the pricing landscape for other issuers at the tight end of the market.