Covered Bonds

Sparebanken Vest Boligkreditt did not need to offer any premium to investors to complete its debut sale of green covered bonds on Wednesday. The deal adds to a recent flurry of socially responsible investments, which are offering financial issuers very competitive terms.

Berlin Hyp left ‘a little bit on the table’ with its new green covered bond on Tuesday. The trade was followed by deal announcements from Kookmin Bank and Sparebank Vest Boligkreditt, both looking to issue in sustainable format.

NN Bank used a quiet market this week to launch the first deal from its new soft bullet covered bond programme. The inaugural deal carried an ‘attractive’ spread and was more than three times subscribed at final terms.

Korean Housing Finance Corporation (KHFC) has launched its second social covered bond of the year in euros, setting the spread for its deal in the middle of its guidance range.

NN Bank unveiled plans on Monday to issue its first covered bond from its newly published soft-bullet programme. At the same time, Berlin Hyp has mandated lead managers for the sale of a new green covered bond.

Two more bankers have ditched NordLB to take on DCM roles at Helaba, as the firm looks to expand its covered bond business.

Issuers are struggling to obtain the necessary internal approvals to issue covered bonds, given how expensive the instruments are compared to the European Central Bank's Targeted Longer Term Refinancing Operations (TLTRO III).

Bank bond spreads widened further on Thursday amid growing numbers of infections in Europe and the US. Deal arrangers say that issuers will need to be more careful about choosing the right issuance window as markets remain choppy.

Coöperatieve Rabobank launched a 10 year covered bond at a spread of 7bp over mid-swaps this week, leaving a small new issue concession for investors. The deal also underlined the recent recovery of credit spreads amid the coronavirus pandemic.

Recent share price movements imply that a third of the loans under moratoria at Italian banks could end up as unlikely to pay (UTP) exposures, according to analysts at Equita, an investment bank, who expect that the true figure could be closer to 10%.

Korea Housing Finance Corp (KHFC) has hired lead managers for a new social covered bond in the euro market. It is its second such deal in the currency this year, and it could face tougher conditions this time.

Investors appeared to be more sensitive of price movements in new issues of covered bonds this week, with valuations in the asset class having returned to within touching distance of their January levels.