Covered Bonds

Banca Carige has sold one of its outstanding covered bonds back into the market as the ailing Italian lender comes into a crucial period for turning its business around and attracting buyout bids.

Westpac and Compagnie de Financement Foncier (CFF) kicked off the new quarter on Monday with large euro benchmarks that were priced flat to their curves.

European banks have been given a boost in equity and debt markets this week, after Peter Praet, a member of the European Central Bank’s executive board, suggested that the terms of a new series of targeted longer term refinancing operations (TLTRO III) could be made more favourable for banks, if needed, to help them lend to the economy.

Oma Savings Bank proved popular on its return to the euro covered bond market on Wednesday, allowing it to hit the upper end of its size ambitions and only pay a slim premium to investors.

The European Central Bank, as the bank supervisor, has a clear mandate to maintain a bank as a going concern, but that is not necessarily positive for covered bonds. The forthcoming European covered bond directive may help mitigate these concerns — but it is not guaranteed.

Oma Savings Bank plans to open order books for a covered bond on Wednesday following an earlier roadshow. The deal comes amid a dearth of covered bond supply this week and a return to negative rates suggesting good scope for ultra-long dated supply.

Nordea Asset Management’s European Covered Bond Opportunities fund has gotten off to a flying start, having been launched in February on the premise it would deliver twice the return of its low duration predecessor.

Virgin Money sold its debut covered bond on Friday. The deal was well subscribed but it attracted much less demand than two earlier Sonia-linked trades this week, reflecting weakening sentiment among investors.

The unique assets and business model of Danish Ship Finance meant the price discovery process was much more challenging for its first euro covered bond than is typical. However, with a conservative starting spread the issuer reeled investors in for its inaugural euro benchmark on Thursday.

Crédit Agricole attracted strong demand for its larger than usual public sector backed covered bond on Thursday, with the strong take-up in stark contrast to its previous issue.

The final text of the Covered Bond Directive was approved on Wednesday and will go to the European Parliament in Strasbourg for a final vote in mid-April.

Danmarks Skibskredit has mandated leads for a 3.5 year single A rated Danish covered bond secured on shipping loans.