Covered Bonds

Central banks’ control was once limited to financial matters — they squatted in the corner, largely unseen. Now, they are stars in the drama — active, talkative stewards of the economy. Society looks to them to solve its problems; not to synch with government, but to make up for its deficiencies.

Central banks are promoting a set of climate scenarios that may encourage banks to continue financing fossil fuel expansion when they should be shutting it down, according to an NGO — highlighting the immense influence central banks could have on climate policy.

The European Central Bank’s Targeted Long Term Refinancing Operation may never disappear, but the central bank will find it difficult to maintain record-breaking interest rates on its loans as the economy recovers from the pandemic. As the terms of the liquidity scheme surely begin to tighten, issuers will have a greater incentive to repay TLTROs and switch to market funding.

Depfa ACS has bought back its remaining Irish covered bonds. Ireland has now lost a total of three covered bond issuing banks leaving two behind — and they haven’t come to the public market for years.

The volume of retained covered bond issuance used for European Central Bank repo purposes exceeds distributed by many times in several countries. While this repo has provided a welcome boost to bank profits, it has come at the expense of long-term banking sector stability.

Polling for GlobalCapital's Covered Bond Awards 2021 closes at 5:30pm London time on Monday, August 16, so please be sure to cast your firm’s vote if you haven’t already done so. Preliminary data shows that the frontrunners for many awards are in close contention, so every vote stands to make a huge difference.

Pfandbriefbank Schweizerischer Hypothekarinstitute woke up the Swiss franc market on Tuesday by selling the first bond in almost a fortnight.

Private placements are expected to make up the bulk of Swedish covered bond paper throughout the latter half of 2021 and, with the Nordic summer holiday period coming to end, issuance from the region is expected to kick off ahead of the eurozone.

The Bank of Cyprus had its covered bond rating bumped up by Moody’s this week, as the agency considered the recent upgrades to the sovereign and issuer ratings, as well as “positive developments of the Cypriot housing market”.

The recent floods in western and central Europe could have an impact on covered bond pools. However, despite uninsured losses expected to total in the billions, covered borrowers are likely to remain insulated thanks to the diversification of their pools.

Market participants expect the Federal Reserve could address the topic of tapering at its meeting later today; however, the spread of the Delta variant may cause the central bank to put any talk on hold until its Jackson Hole Symposium next month.

Canada’s Equitable Bank covered programme received legislative approval this week, paving the way for a debut deal in the coming months.