Covered Bonds

NordLB this (Thursday) morning priced its first jumbo Pfandbrief issue since Landesbanks lost their state guarantees in July 2005, a Eu1bn March 2012 public sector Pfandbrief that is one of the most tightly priced issues since the summer.

Calyon, Credit Suisse and Dresdner Kleinwort opened books on a three year obligations foncières issue for Dexia Municipal Agency this (Wednesday) morning and were quickly able to generate Eu1.8bn of orders at price guidance of 3bp through mid-swaps. The books have been closed, but despite market participants viewing the pricing as attractive, the spread has been fixed in the middle of guidance.

The execution of the Eu1.05bn two year IM Cédulas 12 issue has shown that while the cédulas market is open, it is barely ajar. When the books were closed yesterday (Tuesday) afternoon the deal was only just oversubscribed, and Ahorro Corporación Financiera remains undecided over whether or not to tap the market next week with a Eu1bn-Eu1.5bn three to five year AyT Cédulas Cajas issue.

Orders on NordLB’s Eu1bn March 2012 public sector Pfandbrief had reached Eu1bn by midday at price guidance of 3bp under mid-swaps, as the deal faced stiff competition in the market from competitors, and some market participants said the pricing looked rich. Meanwhile German supply is set to increase further, with HVB mandating a new jumbo this (Wednesday) morning.

Eurohypo’s Eu2.5bn five year jumbo mortgage Pfandbrief issue was priced this (Tuesday) morning at 2bp over mid-swaps after leads Barclays Capital, BNP Paribas, Commerzbank and Dresdner Kleinwort received orders totalling Eu3.7bn. Meanwhile NordLB is set to launch the third jumbo Pfandbrief in two weeks.

Bookbuilding for IM Cédulas’s Eu1.05bn two year multi-issuer deal got off to a steady start this morning, with its Eu500m of demand in the first two hours reflecting the measured pace of the five year Santander trade that reopened the cédulas market two weeks ago.

The growing importance of the cédulas market to Spanish banks in light of the dislocations in the asset backed securities market has been underlined by BankInter’s announcement that it will be launching its first cédulas hipotecarias. The bank has been one of the leading exponents of securitisation in Spain.

Eurohypo is set to price a Eu2bn five year jumbo mortgage Pfandbrief at mid-swaps plus 2bp, having built a book of Eu3.5bn by 1pm. Bookbuilding began today (Monday) at 9am CET with price guidance of the mid-swaps plus 2bp area.

Commerzbank on Friday announced that it will buy the 49% of Hypothekenbank in Essen that it did not previously own. Meanwhile NordLB is expected to take over Deutsche Hypothekenbank.