Covered Bonds

CaixaBank has named the former head of long term funding at Bankia as its head of debt capital markets.

Aareal Bank mandated leads on Wednesday for a four year sterling Pfandbrief. The announcement came a day after Deutsche Pfandbriefbank (PBB) issued the tightest ever Sonia trade.

With the amended legal framework for German Pfrandbriefe set to become law within weeks, observers are upbeat, noting that although extended lockdowns are unhelpful for the commercial real estate (CRE) securing many programmes, the bonds still offer considerable investor protection.

Deutsche Pfandbriefbank (PBB) issued the tightest ever Sonia-linked covered bond on Tuesday at close to fair value, with little spread sensitivity and a high quality order book. The strong result sent a positive signal to other issuers with natural sterling funding needs.

Bausparkasse Schwaebisch Hall (BSH) was able to price a €500m 12 year mortgage Pfandbrief on Tuesday through fair value and showed that, in the face of mounting negative net supply which is now double last year’s total, investors are increasingly desperate for covered bonds.

The European Commission has revised the final wording of its definition of an energy-efficient mortgage in its Taxonomy of Sustainable Economic Activities. The change will greatly improve prospects for originating Taxonomy-compliant green mortgages on buildings constructed before December 2020.

Deutsche Pfandbriefbank (PBB) has mandated leads for the second Sonia linked covered bond of the year and Bausparkasse Schwabisch Hall (BSH) is expected with a euro 12-year deal.

Caisse Française de Financement Local (Caffil) issued its third social covered bond on Monday at a slight premium to where its normal deals would have been expected to price.

The Covid-19 pandemic caused severe disruption to financial markets in 2020-2021. During this difficult time, the Bank of Canada and the Office of the Superintendent of Financial Institutions took a number of actions to build resilience and improve the stability of the Canadian financial system. Federally regulated financial institutions were, among other things, permitted the privilege to pledge covered bonds with the central bank, which provided access to long-term repos and benefited from preferential regulatory treatment of loans subject to payment deferrals.

A handful of borrowers are circling the Nordic markets with an eye to printing after the end of first quarter results. But the looming blackouts have not deterred every type of credit from tapping the market as a range of corporate, covered bond and financial issuers placed paper this week.

Progress in sustainability-linked finance for banks has flipped from glacial to dizzying with Berlin Hyp’s €500m sustainability-linked bond this week.

Banks are optimistic that sustainability-linked bonds have a bright future as part of their funding toolkits, after Berlin Hyp became the first financial institution to land a deal in the format this week. More trades are already on the way and market participants are stepping up their efforts to break down the remaining barriers for FIG borrowers.