Covered Bonds

Bayerische Landesbank (BayernLB) is readying to issue its first covered bond in over two years, having appointed banks on Friday to sell a 10 year deal.

Covered bond bankers were optimistic about the outlook for green issuance after the European Commission published the EU Taxonomy Climate Delegated Act, which as far as real estate is concerned, is broadly in line with the recommendations set out by its technical expert group, current industry standards and a draft circulated earlier this week.

The Province of Ontario ended an absence of almost four years from the Swiss franc market this week to land a 12 year note at fair value. Elsewhere, Valiant Bank and Pfandbriefbank kept the domestic market ticking over with a handful of covered deals.

Canadian Imperial Bank of Commerce returned to the euro covered bond market for its first deal since March 2020, issuing a highly subscribed €1bn eight year flat to fair value this week. At the same time Laurentian Bank said that its programme had received regulatory approval.

Aareal Bank and Deutsche Pfandbriefbank (PBB) issued highly successful Sonia linked Pfandbriefe this week, doubling the supply seen so far this year.

Aareal Bank managed to attract healthy demand for its first Sonia covered bond, enabling it to price the deal in line with fair value, in a large size, with negligible price sensitivity and a high quality order book.

Laurentian Bank has received approval from Canada Mortgage and Housing Corporation to establish a C$2bn legislative covered bond programme.

Canadian Imperial Bank of Commerce returned to the euro covered bond market for its first deal since March 2020, issuing a highly subscribed €1bn eight year flat to fair value on Thursday.

The detailed rules for the EU Taxonomy of Sustainable Economic Activities look set to come into force, as the European Commission published them on Wednesday, after weeks of intense lobbying and negotiation that had raised the prospect of them being delayed again. Gas will not enter the Taxonomy for now and will be dealt with in separate legislation, but nuclear power could enter the Taxonomy later this year, alarming greens.

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.