Covered Bonds

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.

Skipton Building Society took advantage of a strong credit market and brief hiatus in the quickly evolving and politically chaotic backdrop to Brexit to issue a £600m five year Sonia linked covered bond. The deal was more heavily subscribed and attracted a broader range of investors than any of its previous deals, yet was priced with little or no new issue premium.

Crédit Agricole Italia’s eight year covered bond has the highest BondMarker average score of any deal issued so far this month. The transaction is closely followed by deals from Banco BPI and BPER Banka. Intesa Sanpaolo is leading among the six Italian covered bonds issued this year, but the survey is still open and some marks could yet improve.

Skipton Building Society has mandated leads for its first Sonia-linked covered bond. The issuer follows National Westminster Bank and takes advantage of an improvement in sentiment that followed a UK Parliament vote last week.