Covered Bonds

Muenchener Hypothekenbank took the unusual decision of stretching execution over two days for its fixed rate sterling Pfandbrief, the first to be issued this year. The measured approach paid off with the issuer managing to tighten the spread by 3bp and achieve a larger than expected size.

DZ Hyp pulled in a solid order book for its €750m no-grow Pfandbrief that was almost positive yielding. Demand for Credit Mutuel CIC’s more negative yielding seven year was much slower to grow and smaller, making execution less certain.

DZ Hyp plans to issue a €750m no-grow Pfandbrief on Wednesday as Muenchener Hypothekenbank (MuHyp) marketed its inaugural sterling benchmark to UK investors amid a sharp fall in global yields.

Aside from the covered bond market, issuance volumes fell away in most corners of the primary market last week as the markets slow for summer. Although most deals were well subscribed, the average oversubscription ratios in each market struggled to maintain previous levels — a reflection of the tight spreads on offer in FIG and corporate bond markets.

Royal Bank of Canada has sold the third Canadian covered bond in sterling this year, landing its £1.25bn deal at a spread identical to those of its two peers. Meanwhile, Münchener Hypothekenbank is set to join the sterling spree in the coming days with the first fixed rate covered bond in the currency since 2018.

BNP Paribas sold its first Swiss franc green bond on Tuesday, navigating concerns over the non-preferred format to twice bump up the size of its Sfr230m ($230.8m) deal. It was joined in the market by Pfandbriefzentrale, which printed two tranches of covered bonds.

Sentiment in the sovereign, supranational and agency sector was broadly supportive on Monday ahead of a smaller than expected 30 year OAT sale on Tuesday and, more importantly, the European Union’s next slug of issuance under its Next Generation programme that is due next week, said traders.

Compagnie de Financement Foncier responded to investor demand for defensive maturities on Monday by issuing the first five year covered bond from a core European bank this year. Although the super-sized deal attracted substantial interest, the leads said it would be incorrect to conclude that market sentiment had turned positive.

GlobalCapital invites market participants to submit nominations for this year’s Covered Bond Awards, which recognise excellence in the industry over the past year.

Banks that have access to diverse pockets of demand will be far better equipped to deal with any contraction in central bank liquidity, which could occur if high inflation spooks policy makers and markets.

UniCredit plans to make labelled financing a regular part of its funding across the group, following the launch of its debut labelled bond this week. Its first deal proved popular as it stacked up more than €3.25bn of demand.

Crédit Agricole SFH and Coventry Building Society managed to achieve their price and size targets in the covered bond market on Thursday with oversubscribed deals. However, investors displayed plenty of price sensitivity.