Covered Bonds

The European Banking Authority has been granted a two month extension to complete its assessment of the case for European Secured Notes (ESNs).

Bank of China (BoC) plans to play to its strengths by deploying its balance sheet and providing liquidity to parched investors. With syndicate and trading operations in place, it has hired Tim Skeet as head of Western European origination.

Raiffeisen Landesbank-Steiermark attracted strong demand for the most generously priced 15 year Eurozone covered bond of the year, and the first from an Austrian lender in this tenor. The level of excess demand suggests market conditions may have begun to improve.

Raiffeisen-Landesbank Steiermark is expected to open order books on Thursday for a €500m 15 year Austrian Pfandbrief, LBBW is planning a UK roadshow with a sterling Pfandbrief in mind and Aktia Bank has announced plans for a euro covered bond roadshow.

April 2018 was one of the heaviest Aprils in the last decade for covered bond supply, and with the Eurosystem buying less in the primary market, offers are still easy to find. But with near term supply expected to moderate and the Eurosystem potentially becoming more active in the secondary market, bankers are hopeful that spreads will stabilise.

Caja Rural Navarra’s fruitful return to the covered bond market last week was underpinned by several important elements, not least its decision to update and improve its sustainability framework. In the context of the European Central Bank’s diminishing support, the bank’s efforts offer a salutary guide to other borrowers, who will soon be obliged to compete harder for investors’ attention.

The Covered Bond Investor Council (CBIC) has responded to the European Commission’s (EC) proposed covered bond directive, requesting a more precise definition of eligible assets among a number of other recommendations.

Raiffeisen-Landesbank Steiermark and Hypo Oberösterreich are the only two issuers visibly planning covered bond deals, but with three major Spanish banks emerging from blackout on Friday, there is hope for more Spanish supply. In the meantime, secondary market flow has become more balanced with demand noted particularly at the long end.

Canada’s office of the superintendent of financial institutions (OSFI) is expected to raise limits on covered bond issuance, paving the way for additional supply from established and new names.

Santander has hired a new covered bond trader who shares the same name as the trader it recently lost.

Skipton Building Society issued its inaugural covered bond on Wednesday at a good size and a fair spread. The sale follows a pattern of wholesale funding diversification for the borrower that began last year.

Caja Rural de Navarra (CRN) priced the first Spanish covered bond in almost three months flat to its curve and with the highest subscription ratio of any investment grade (IG) covered bond issued this year. The recently upgraded sustainable offering, which was rated six notches above the Kingdom of Spain, also offered a rare spread pick-up over the sovereign.