Covered Bonds

SR Boligkreditt attracted robust demand for its first green covered bond on Tuesday, enabling the bonds to be priced with a minimal concession.

A Banca Monte Dei Paschi di Siena (MPS) €1bn seven year issued on Tuesday was the most oversubscribed covered bond of its size issued this year and, with 300 investor orders, attracted the most granular order book of the year by a wide margin.

Caisse de Refinancement de l'Habitat (CRH) returned to the covered bond market after a six year absence with a transaction that resonated well with the market, according to the bank’s chief executive, Marc Nocart.

Banca Monte dei Paschi di Siena is getting ready to sell a new seven year covered bond in euros, in what will be its fifth deal in the currency so far this year.

The risks associated with issuing at negative yields will drive non-European issuers away from the euro covered bond market, according to a report from NordLB.

Some covered bonds issued recently have lacked sparkle, causing concern over the outlook. Even so, spreads still have good scope to tighten, especially in core Europe and the short end of the curve, though possibly not until the start of October, said two traders on Friday.

Royal Bank of Canada on Thursday became the first international bank to issue a five year Sonia linked covered bond, a trade that delivered competitive pricing and sizeable funding.

AIB Group has become the first bank in Ireland to develop a green bond framework and has mandated ING for a roadshow to promote it. The framework aims to support lending for energy-efficient buildings and other projects that promote the transition to a low carbon economy.

Deutsche Bank issued the most oversubscribed Pfandbrief since mid-July on Wednesday. The strong showing contrasted to Bawag, which competed less well for investors’ attention with a deal in the same tenor and with the same starting spread. The unconvincing Austrian outcome has caused some to question the market outlook and one borrower to postpone issuance.

A run of 10 year covered bond issuance looks set to continue through to Wednesday with Bawag and Deutsche Bank announcing plans for Pfandbrief transactions. Bankers on these deals are hopeful that order book momentum improves, but some are slightly concerned that investor fatigue may be setting in.

Hypo Noe and Prima banka Slovensko competed for investors’ attention with similar sized covered bonds in the same seven year tenor on Tuesday. The Austrian transaction was priced with barely any concession and the higher rated Slovakian transaction was the first debut deal to price with a negative yield and the first from Central and Eastern Europe with a negative yield.

Hypo Noe Landesbank fuer Niederoesterreich und Wien (Hypo Noe) has mandated lead managers for a seven year public sector backed covered bond.