Covered Bonds

Nationale Nederlanden Bank has mandated leads for a 10 year euro denominated conditional pass through (CPT) covered bond and Aareal Bank has issued a fixed rate sterling Pfandbrief.

An SSA bond and covered bond trader who was on indefinite leave from his desk following the launch of an investigation into the SSA market by the US Department of Justice in 2015 is back at work, GlobalCapital understands. His return has come as a US court dismissed a lawsuit related to the investigation.

The Cover and GlobalCapital held the annual Covered Bond Awards Dinner on Thursday night at BMW Welt in Munich, celebrating the best performers in the market.

After becoming the first private equity firm to obtain a banking licence in France, the Cerberus-owned My Money Bank (MMB) SCF has appointed joint leads for a roadshow, with a view to issuing its debut euro-denominated Obligations Foncières.

Covered bond spreads are expected to widen, but the tone was hardly apocalyptic at the ECBC/Euromoney covered bond conference on Thursday.

As the market waits for Brazilian banks to launch the first covered bonds out of the country, market participants from the country say it provides the lenders with a useful new instrument. But whether they can reach investment grade status in euros or dollars depends on currency risk mitigation, according to a Moody’s official.

Negotiations between the European Parliament, the European Commission and the covered bond industry around asset eligibility are like trying to “put a square peg in a round hole” and have proved to be the “mother of all discussions”, said key representatives of the two organisations at the European Covered Bond Council’s (ECBC) 28th Plenary Meeting in Munich on Wednesday.

Deutsche Kreditbank and Skipton Building Society both announced mandates for euro-denominated covered bonds on Wednesday, with DKB’s to come as its debut social bond.

Jörg Kukies, secretary of state at the German Ministry of Finance, suggested that the EU’s proposed covered bond directive should not dilute the quality of the product too much. He also wanted to see developments on the Capital Market Union (CMU) by the end of the year and called for an agreement on third-country central counterparties (CCPs).

Santander UK needed to offer an unusually attractive concession for its second euro covered bond deal of the year, but priced its first sterling Sonia-linked deal in line with Lloyds.

Raiffeisenlandesbank Vorarlberg issued its inaugural covered bond on Monday which, despite offering a modest concession, was the most oversubscribed benchmark Austrian transaction since May.

Lloyds Bank attracted stellar demand for the first Sonia-linked trade from a FIG borrower. The covered bond format was swiftly followed by a senior unsecured deal from Royal Bank of Canada. Bill Thornhill reports.