Covered Bonds

GlobalCapital is thrilled to announce that the survey for this year’s awards is now open. All market participants are invited to take part.

Only four member states have transposed the EU’s Covered Bond Directive into national law on time. As seven are nearly there, the other 16 members will have to work hard to meet the July 2022 deadline for implementation, after which the European Commission could activate infringement procedures.

Georgia has become the latest country to signal its intention to develop a covered bond law, though given the small size of its mortgage market, issuance prospects are likely to prove limited.

GlobalCapital is delighted to announce that the Covered Bond Awards 2021 survey will open for voting from Thursday. Congratulations to all those who made it to the shortlists.

Covered bond primary activity slowed to a trickle in euros on Wednesday as DekaBank issued an oversubscribed sub-benchmark sized five year public sector covered bond amid a pick-up in European Central Bank purchases. At the same time, Muenchener Hyp (MuHyp) tapped the Swiss franc market in the wake of a four part Sfr910m ($992m) deal issued on Tuesday by Swiss Pfandbriefbank.

The covered bond and sovereign, supranational and agency sectors were well very well bid on Tuesday despite supply from the European Union and US T-Bill auctions. Even though US inflation is proving to be much higher than expected, dovish comments from the European Central Bank and the expectation of lower supply over the summer kept the mood light in secondary markets.

The primary capital markets had a difficult end to last week as issuers found it increasingly challenging to execute deals. Although stable in most markets, the average concessions paid in the corporate bond market edged upwards and continued to climb in the FIG market.

Commonwealth Bank of Australia’s has increased the size of its covered bond programme after the Reserve Bank of Australia opted to end its Term Funding Facility, suggesting that Australian banks could be on the verge of increasing their public bond market funding.

Covered bond and SSA research analysts at Société Générale are set to leave the bank for other firms later this year.

Note holders of Depfa ACS bonds can expect to be paid handsomely for their holdings, provided they meet Monday’s registration deadline to agree to the new purchase scheme. But although the terms look attractive, it is far from clear that a successful outcome will be achieved.

Covered bond supply is likely to remain anaemic over the second half of this year, with many analysts sharply downgrading their forecasts. As cheap central bank financing is expected to remain in place well into next year and deposits will probably remain high, an improvement in supply may be slow in coming.

A sharp and mysterious drop in US Treasury yields blindsided investors this week, which swiftly fed through to European markets. The moves came perilously close to wreaking havoc in primary markets and issuers in many asset classes are thinking twice before pressing ahead with issuance, write Richard Metcalf, Lewis McLellan, Bill Thornhill, Mike Turner and Oliver West.