Covered Bonds

Stability of foreign currency funding is a priority for Sumitomo Mitsui Banking Corporation and covered bonds provide a new level of balance in this regard, according to the bank’s head of treasury. Since other borrowers in Japan are sure to be thinking along the same lines, the market for Japan's covered bond is likely to have tremendous scope for growth.

Australia and New Zealand Banking Group Limited has mandated leads for a roadshow with a view to issuing a covered bond, or senior unsecured transaction, or both. In the meantime, primary market activity is expected to slow this week and next allowing time for the recent slate of deals to be digested and for market sentiment to improve.

Münchener Hypothekenbank sold its first Pfandbrief secured on green mortgages on Tuesday, managing to attract a solid swell of demand from a diversified set of new investors.

Sumitomo Mitsui Banking Corporation has set a strong precedent for Japan’s nascent covered bond market by attracting a comfortably oversubscribed, diverse, high quality order book for its first deal, the first from Japan.

Covered bonds have drifted wider over the last few weeks, reflecting heavier than expected supply and diminished market maker interest. Even so, the primary market is functioning healthily, boding well for prospective debut deals from Münchener Hypothekenbank and SMBC, deals that could surface as early as Tuesday.

OP Financial Group has laid out details of how it will use bond proceeds for green projects and businesses. FIG deals with a sustainable flavour have generally been well received this month, but not all of them have succeeded.

Panama’s Banco La Hipotecaria is planning to sell its first covered bond. The five year 144A/Reg S deal will be structured under a contractual framework and privately placed.

After scrapping its first attempt to issue Obligations Foncières last month, My Money Bank was finally able to complete its covered bond deal on Wednesday — but subscription levels were muted.

Korea Housing Finance Corporation (KHFC) entered the euro market for the first time on Wednesday, where it was met with a warm response for what was also the first ever social covered bond from an Asian borrower.

Swedish Covered Bond Corp (SCBC) had a tough time on Tuesday attracting a convincing order book for its fourth covered bond of the year, possibly reflecting difficult market conditions, its frequency of issuance and the tenor of its deal. In contrast, Crédit Mutuel Arkéa managed to quickly pull in demand for a shorter deal.

The covered bonds of National Bank of Greece will be eligible for two bond indices and will attract a substantially lower capital charge following Fitch’s recent rating upgrade. At the same time, Helaba tapped its February 2024 and Münchener Hypothekenbank hit the road with plans to issue its first green Pfandbrief.

A proposed change to the Pfandbrief Act will allow German covered bond issuers to keep UK assets in their cover pools, without falling foul of Pfandbrief eligibility criteria.