Covered Bonds

Deutsche Hypo, Erste Group and Credit Agricole SCF have mandated leads for covered bonds that are all expected to carry negative yields.

A transparent pricing approach was integral to the success on Tuesday of UniCredit AG’s (HVB) five year Pfandbrief, which was launched with a deeply negative yield.

BMO Capital Markets’ SSA banker Lindsay Wortzman is transferring to Toronto, and to replace her the London team have picked up Samantha Cook from Nomura.

Compagnie de Financement Foncier (CFF) unearthed strong demand for the first negative yielding non-German covered bond of the year, and the first with a long tenor.

The financial institutions bond market reopened following the summer break this week, with many issuers rushing to frontload supply before the European Central Bank’s meeting in September. But the market quickly ran into resistance from investors, as they pushed back against the glut of deals.

Global issuance of covered bonds returned to growth in 2018 according to the latest figures from the European Covered Bond Council (ECBC) published on Thursday, but the market faces a big challenge in keeping pace this year as negative rates play havoc with funding decisions.

Investors in unsecured bank debt instruments are unlikely to put up much of a fight against the inevitable march into negative yielding new issuance.

European bank funding plans do not account for the redemption of about a quarter of the €740bn they borrowed from the European Central Bank through the targeted longer-term refinancing operations (TLTRO II), according to a report published by the European Banking Authority this week.

The Association of German Pfandbrief Banks (VDP) has introduced minimum standards for issuing green Pfandbriefe, a development that should help seal Germany’s position as a leading jurisdiction for green covered bond issuance.

Europe's bond market reopened for the autumn issuance season this week — but it is a new bond market. The summer's queasy bout of bearishness has pushed government bond yields to unprecedented lows and these are now for the first time being tested as a platform for private sector bond issuance.

Berlin Hyp, the German mortgage bank, this week set a new record with the most negative yielding covered bond, a transaction that should bolster the confidence of other borrowers who can no longer put off issuing such deals.

Canada's Equitable Bank has announced plans to issue its first covered bond, possibly as early as next year. Its decision follows an increase in Canada’s regulatory issuance limit and paves the way for several other smaller Canadian banks to follow suit.