Covered Bonds

Lower overcollateralisation (OC), tighter spreads and access to the ultra-long end of the curve are likely to cause some Dutch covered bond banks to reconsider whether it is still viable to issue conditional pass through (CPT) deals or follow NN Bank, which recently switched from to soft bullet issuance.

GlobalCapital will open the poll for its Covered Bond Awards 2020 shortly and welcomes feedback on the award categories and nominations for shortlists.

The Swiss government has recently approved draft amendments to its Pfandbrief law that will increase transparency and legal certainty, reducing the risk of a fire sale and payment default.

Kookmin Bank is expected to surface later this week with its first euro covered bond which will fund social housing. The deal is to emerge amid mounting concern that diminishing supply, rising redemptions and aggressive central bank buying will cause an unprecedented technical squeeze in the covered bond market.

Fitch has downgraded its covered bond ratings for Banco Montepio amid a deterioration in the outlook for residential mortgage loans in Portugal, exacerbated by the impact of the coronavirus pandemic.

Skipton Building Society is looking for approval from investors to convert the interest basis on one of its covered bonds from Libor to Sonia.

Syndicate bankers are scrambling to make sense of the covered bond market, where sentiment has been changeable in recent weeks. Amid volatility and small issuance windows, sustainable bonds have proven a safe strategy to ensure successful deals.

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.