Covered Bonds

Landesbank Baden-Württemberg priced its largest ever jumbo Pfandbrief today (Thursday), a Eu2bn five year public sector issue that has reinforced the reopening of the primary covered bond market.

Royal Bank of Canada has pushed the button on the first Canadian covered bond, mandating BNP Paribas and Commerzbank alongside structuring advisers Barclays Capital and RBC Capital Markets for an issue after a roadshow starting on 8 October.

The European Covered Bond Council has put together its new market-makers’ and issuers’ committee, which will advise it on how to react to difficult market conditions.

Dominion Bond Rating Service expects to announce its methodology for rating covered bonds in October. Catherine Gerst, managing director of structured finance at DBRS in Paris, describes its goal as “trying to bring transparency” to both issuers and investors.

Landesbank Baden-Württemberg will launch the first jumbo Pfandbrief since the market ground to a halt this summer, a five year public sector deal mandated to Citigroup, LBBW and UniCredit. Early talk suggests a spread of mid-swaps flat.

We often hear how banks are restructuring to create “client-facing” platforms with “seamless” communication between divisions providing a “one-stop shop”. Well, in the recent turmoil many banks have clearly reverted to an older mantra: “Every man for himself.”

Sparebank 1 Boligkreditt priced its debut covered bond this (Tuesday) morning, a Eu1.5bn three year transaction that has won plaudits for its unhurried execution.

Pfandbrief issuers and investors appear to be playing a game of chicken, in which both are hoping that the other will give in first and compromise on their pricing expectations.

The question being asked in the wake of Sparebank 1 Boligkreditt’s successful reopening of the covered bond market today (Tuesday) was: who’s next?