Covered Bonds

Dexia Municipal Agency this (Wednesday) morning priced its Eu1.5bn 10 year obligation foncières at 3bp over mid-swaps. The bond, due 13 November 2017, is only the second 10 year to be issued since the liquidity and credit crises.

Santander has successfully executed the first public Spanish covered bond since the liquidity and credit crisis struck, a Eu1.5bn five year deal that allayed fears that spreads in the cédulas market could widen in the face of new issuance.

Dexia Municipal Agency has built a book of Eu2.8bn for its 10 year obligation foncières issue launched this morning and pricing will be fixed at 3bp over mid-swaps and the size increased to Eu1.5bn.

CIF Euromortgage priced its Eu1.25bn April 2011 issue at 3bp through mid-swaps this morning after building a Eu2.8bn book at minus 2bp guidance yesterday (Monday) morning. But although investors were enthusiastic about the new issue, they were more demanding than ever in their credit-work and on the choice of leads.

Santander appeared to have pitched its five year cédulas hipotecarias - the first since the market closed in August - at the right spread guidance this morning, with investors responding favourably to the 13bp over mid-swaps area talk.

CIF Euromortgage quickly turned around a Eu1.25bn April 2011 obligations foncières issue this (Monday) morning and price the deal at 3bp through mid-swaps, the tightest level achieved on any jumbo since the market was re-opened.

The UK Investment Management Association on Friday called for changes to HM Treasury’s planned Recognised Covered Bond framework to make it more prescriptive and requested a delay to its planned implementation on 1 January 2008. The move, which surprised most market participants who had been expecting a smooth transition to the new regime, was described as “incredibly unhelpful” by one leading player, but others were more sympathetic.

Our scoop that Barclays will soon be issuing covered bonds prompted a frenzy of e-mails as analysts struggled to get to grips with the news, and arguments have continued to rage about just who is who long after last week's post mortem in New York finished.