Covered Bonds

Ahorro Corporación Financiera is testing the water for a possible Eu1bn-Eu1.5bn three to five year AyT Cédulas Cajas issue for launch in the week of November 19, having mandated Danske Bank, Dresdner Kleinwort, DZ Bank, Merrill Lynch and Société Générale to sound out the market today (Wednesday).

Compagnie de Financement Foncier opened books on a seven year benchmark this (Wednesday) morning at guidance of 3bp over mid-swaps, the same level at which Dexia Municipal Agency priced a Eu1.5bn 10 year obligations foncières issue only last week.

DnB Nor Boligkreditt’s second ever covered bond, a three year deal, sold out quickly this (Wednesday) morning, in stark contrast to its five year debut in June, which hit the market just as it was turning south.

The covered bond market is set for its biggest November ever, with mandates coming thick and fast in the past 24 hours and more on the way. Secondary spreads have nevertheless remained resilient in the face of the coming supply onslaught, even if they have been weaker on the wider credit market worries.

WestLB priced its Eu1bn three year jumbo at 5bp through mid-swaps, having built a book of Eu2bn, buoyed by good demand from Asia overnight. The books were closed to European accounts yesterday (Tuesday) afternoon, but to Asian accounts this morning.

Banco Espírito Santo will launch its inaugural Portuguese covered bond benchmark after a European roadshow, having announced Barclays Capital, Calyon, Espírito Santo Investment and programme arranger Deutsche Bank as bookrunners today (Tuesday).

The sustainability of France’s obligations foncières regime is being questioned in light of Banque Fédérale des Banques Populaires’s announcement that it is setting up a Eu25bn structured covered bond programme. Mutual groups such as Crédit Agricole and Caisse Nationale des Caisses d’Epargne are also said to be considering shunning the legislative framework, meaning that obligations foncières issuers could soon be in the minority in France.

Bookbuilding on WestLB’s Eu1bn public jumbo Pfandbrief began at 9.30am CET this (Tuesday) morning and was said at lunchtime by officials at the leads to be going smoothly.

DnB Nor Boligkreditt is expected to launch a benchmark sized euro denominated covered bond this week, its second, having mandated Barclays Capital, SG CIB and UniCredit as lead managers.