Covered Bonds

The Cover can exclusively reveal that covered bond issuers would like to sell nearly Eu300bn of euro benchmarks in 2008. This prediction was not divined from tea leaves, revelation, or animal sacrifice, but by consulting with a large sample of the market’s analysts.

Merrill Lynch has combined its rates syndicate desk with covered bond and agency trading in Europe. Nick Dent is heading up the integrated platform, which the bank believes will reinforce its capabilities in the covered bond market.

Syndicate managers are embarking on rugged winter training ahead of what is set to be the toughest January ever in the covered bond market. But whether snowboarding in the highest ski resort in France or motor-biking around Patagonia, nothing is likely to be able to prepare market participants for the highs and lows expected in the New Year.

Danske Bank has mandated BNP Paribas, Danske and HSBC to jointly arrange its Eu15bn covered bond programme and lead manage its inaugural euro benchmark. The programme promises to be the first under which covered bonds will be backed by residential mortgages from a variety of jurisdictions.

The covered bond market continued to enjoy calmer weather this week, with spreads recovering on the back of a calm week. Market participants reported that potential issuers now felt secondary spreads were stable enough to guide future issuance.

The Cover understands that Sylvie Vadé is leaving her position as director general of Dexia Municipal Agency, the covered bond issuing entity of the Dexia group. The issuer did not respond to the Cover’s enquiries.

The European mortgage industry has reacted with relief to the news that there will be no directive included in EU proposals designed to promote stability and integration in the European mortgage market. The emphasis is now expected to be on voluntary measures rather than legislation.