Covered Bonds

The Fédération des Caisses Desjardins du Québec (FDCQ) issued its longest covered bond at its tightest-ever spread to Canadian peers on Tuesday.

The Fédération des caisses Desjardins du Québec (FCDQ) on Monday mandated leads for a euro covered bond, its second appearance in euros since January and its third overall in covered bonds.

Crédit Agricole has mandated its investment banking team to present its updated green bond framework, which will be used for its debut green covered bond, to investors.

DZ Bank has appointed a new head of covered bonds in a move that acknowledges the bank’s growing league table presence in the euro covered bond market, particularly in Canada and Slovakia.

Strong interest from investors outside the UK on Thursday ensured that Yorkshire Building Society (YBS) was able to attract the highest demand for any sterling covered bond it has ever issued. Moreover, the sizeable deal was priced with no new issue concession and several basis points cheaper than if it the funding was in euros.

Yorkshire Building Society (YBS) mandated leads for a Sonia-linked covered bond on Wednesday, taking advantage of the excess demand that was identified in an earlier deal from Santander UK.

Demand for ground-breaking covered bonds issued on Wednesday by Deutsche Bank and Danish Ships Finance was adequate but both required hefty premiums — illustrating a higher degree of investor caution than had been expected.

Danish Ships Finance, Natixis Pfandbriefbank and Raiffeisen Bank International will keep the primary market busy with deals and roadshows this week. But the main focus will be on the size and spread that Deutsche Bank achieves for its innovative debut structured conditional pass through (CPT) covered bond that will be launched imminently.

HVB, the German subsidiary of UniCredit, on Tuesday attracted one of the highest orders books for a €1bn covered bond from a core European bank in the last six months. It was able to tighten the pricing gap by 4bp to a competing deal issued by OP Mortgage Bank.

The covered bond market was on strong form at the beginning of the week, with Austria’s Volksbank Wien extending its covered bond curve with its second ever trade, which it priced flat to fair value.

Caixa Económica Montepio Geral was able to tighten pricing for a five year conditional passthrough covered bond, issued on Thursday, by an extraordinary 17bp from the initial level, causing rival bankers to question why it had been necessary to start with what was called a preposterously tight 2bp spread range.

Covered bond market participants expressed surprise at the sluggishness of book updates on Credit Mutuel Arkéa’s debut public sector covered bond, issued on Thursday morning. But the deal ended up more than twice subscribed with a great deal of smaller orders and little price sensitivity in the book.