Covered Bonds

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.

Santander did well to attract an oversubscribed order book for its €1bn 10 year Cédulas on Thursday — even as Spanish bank debt and equity was sold off after the country's supreme court ruled that banks are liable for mortgage documentation taxes.

HSH Nordbank attracted a much higher oversubscription ratio for its positive yielding Pfandbrief than Belfius Bank did for its negative yielding Pandbrievan. The two covered bonds, which were both priced on Wednesday, showed that investors’ lust for yield remains undiminished.

Toronto Dominion (TD) attracted stronger demand on Tuesday than Royal Bank of Canada’s three year dollar benchmark did the day before, and accordingly was able to issue in a larger size.

Münchener Hypothekenbank has mandated leads to roadshow its first green Pfandbrief while HSH Nordbank has mandated leads for a 3.5 year deal in the format.

Bank of Nova Scotia took full advantage of a respite in hitherto volatile market conditions and an expected secondary market spread widening to issue the largest euro covered bond from a non-European issuer this year on Tuesday — and paid a slim new issue premium to boot.

In less than 24 hours Royal Bank of Canada and Toronto Dominion have almost doubled the volume of Canadian dollar covered bonds issued this year. And with the cost of funding being cheaper than euro covered bonds and half senior unsecured, others may be tempted to follow.

Portuguese covered bonds have held steady after Moody’s upgraded the sovereign rating to investment grade rating. Given the market’s poor liquidity, new issuance is likely to play a more pivotal role in determining the spread outlook than the sovereign's credit rating.

Berlin Hyp’s (BHH) third green Pfandbrief attracted a solid oversubscription ratio on Friday, and though the deal offered a hefty concession to its own curve, the pricing was tight compared with other recent deals.

Sumitomo Mitsui Banking Corporation (SMBC) has mandated leads to roadshow the first ever Japanese covered bond. The RMBS-backed deal is expected to appeal to a broad universe of traditional investors and will set the tone for Japanese megabanks and other borrowers in what could be a rich supply vein for covered bond investors.

SR Boligkreditt issued a €750m seven year with a slim new issue concession showing that the primary covered bond market is still receptive, despite the rates market volatility seen earlier in the week.

Covered bond issuance is set to grow next year as lenders refinance central bank liquidity, say analysts. A survey by the European Banking Authority also indicates covered bond funding will "remain dynamic".