Covered Bonds

Ex-Barclays banker joins Finsbury to develop equity advisory — Laubjerg hired for natural resources at HSBC — Rousseau leaves Deutsche and joins Citi

Sumitomo Mitsui Banking Corporation sent a positive signal to hesitant Asian covered bond issuers on Thursday when it was set to price its first negative yielding covered bond, attracting a deeper and broader scale of demand than on any of its previous deals.

The covered bond market appeared well supported this week with the success of new deals suggesting scope for spreads to tighten further, especially Asian bonds. However, the long end of the curve could prove vulnerable as SSA supply ramps up, especially from the EU, which will be funding its coronavirus rescue package in the bond market, according to a covered bond trader with a good share of the market.

BPCE’s seven year benchmark issued on Wednesday was subscribed more than six times and priced flat to the curve. The "overwhelming" demand caught leads off-guard and suggests eurozone issuers can now price deals with negative new issue premiums (NIPs) for deals with a restricted size.

Based on an analysis of 470,000 real estate valuations and 72,980 Italian mortgages, the European Covered Bond Council has published a report showing that energy-efficient mortgages present less credit risk than normal mortgages.

A former sovereign, supranational and agency bond trader at Commerzbank has joined NordLB after an almost two year hiatus from the capital markets.

MünchenerHyp (MuHyp) attracted swift and strong demand for its 15 year Pfandbrief on Tuesday, reflecting the rarity of its appearances in the primary market and the scarcity of 15 year Pfandbrief supply this year.

Standard and Poor’s is due to review the ratings of several German Laender over the next few weeks, and downgrades could undermine Pfandbrief valuations. But some market participants believe that scarcity of issuance in the asset class could in fact make spreads tighten further.

DNB issued a Swedish krona covered bond on Thursday in a size large enough to qualify for the best treatment under the liquidity coverage ratio (LCR) and at a more competitive funding level than was available elsewhere. The deal was issued amid renewed hope that Nordic issuers will stay active in euro covered bonds this year.

DNB successfully issued a Swedish krona covered bond on Thursday in a size large enough to qualify for the best treatment under the liquidity coverage ratio (LCR) and at a more competitive funding level than was available elsewhere. The deal emerges in the wake of a report from Moody’s which highlighted the strength of the Swedish covered bond market.

Scope for Nordic covered bond issuance in euros is moderately positive, even in Sweden where some issuers could yet make a strategic return to euros despite the higher cost. Danes and Norwegians may also make an appearance in euros, but Finnish supply hopes are considered more limited.

Erste Group has changed the reporting on its cover pool in a move that has effectively resulted in a substantial increase in issuance capacity which other borrowers with limited collateral could mimic.