Covered Bonds
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HM Treasury finally published its proposed "recognised covered bond" legislation on Monday, revealing the flexible framework that UK market participants had hoped for.
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Banco Bilbao Vizcaya Argentaria had to compromise on size and paid a higher spread than expected when pricing the first dollar cédulas benchmark last Friday in a $1bn 10 year issue.
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Washington Mutual has postponed its debut dollar covered bond, cancelling a roadshow that was due to begin in the US on Monday.
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What should have been an amazing week for the covered bond market, with two new issuers in the euro market and an inaugural deal in dollars, turned out to be one of the most difficult so far this year, as markets drifted wider on the back of credit concerns.
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The Office of the Superintendent of Financial Institutions Canada (OSFI) has given the country’s banks permission to issue covered bonds, but only an amount up to 4% of their total assets.
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After the deluge of covered bond issuance in the previous fortnight, Swedish Covered Bond Corp had the market to itself this week, launching a Eu1bn two year issue, but even that was priced at the wide end of guidance as holidays and continued uncertainty muted the wider fixed income markets.
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The Luxembourg market received a fillip this week with news that Dexia is establishing a lettres de gage issuer alongside Dexia Municipal Agency and Dexia Kommunalbank Deutschland.
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Caixa Economica Montepio Geral has chosen ABN Amro to arrange its covered bond programme.
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Santander is establishing a new multi-seller cédulas programme, Programa Independiente de Titulización de Cédulas Hipotecarias (Pitch).
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The extremes to which banks are going to win business in the covered bond market were highlighted by BNP Paribas’s position as a bookrunner of Bank of America’s Eu1.5bn three year issue this week.
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DnB Nor’s inaugural covered bond, a Eu1.5bn five year fell short of expectations this week, becoming a victim of a deterioration in market sentiment.
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The rapid growth in the US market has captured the attention of Europe’s covered bond issuers in the past year, but there is still plenty of scope for increasing distribution in Asia. The key to unlocking the next stage of growth may be the beginning of indigenous issuance from Asia.