Covered Bonds

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.

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.