Covered Bonds

Nationwide Building Society issued its first sterling covered bond for two years on Thursday and showed that demand for the product was still strong as it picked up £1bn of five year funding.

ING Bank returned to the covered bond market after a five year absence on Thursday to issue a €1.75bn 10 year deal. A generous starting premium and a rise in 10 year swap yields helped to boost demand.

ING has mandated leads for its first covered bond in five years. Although demand for the rare credit is likely to be strong, the secondary market has continued to soften.

ABN Amro issued the tightest ever 20 year covered bond on Wednesday, but was obliged to pay a considerable new issue premium, causing a repricing of its curve and the market.

Bondholders involved in the resolution of Banco Popular have turned their attention towards US courts in an effort to extract further information from Santander, the bank’s new owner.

Despite a turbulent market backdrop on Tuesday, Compagnie de Financement Foncier (CFF) took advantage of the fresh money that is usually put to work at the start of each quarter to issue a defensive €1.5bn covered bond with a ‘very generous’ starting spread.

ABN Amro is set to return to the covered bond market with its second deal of the year and its longest so far. At the same time The Mortgage Society of Finland plans a roadshow.

Caisse Française de Financement Local (Caffil) plans to issue its first social covered bond this year and, along with La Banque Postable (LBP), it is considering a debut green deal in 2019. Deutsche Pfandbriefbank (PBB) has green assets to fund but is biding its time. These issuers and other key market participants spoke of their sustainable finance plans in the Crédit Agricole CIB covered bond roundtable.

Turkiye Is Bankasi (Isbank) recently signaled its intention to issue, while HSBC Canada has registered a covered bond corporate entity.

Buyers, sellers and arrangers gathered together in March, in the wake of the European Commission proposing its Covered Bond Directive, for the GlobalCapital/Crédit Agricole CIB covered bond roundtable to debate how the market would fare as the European Central Bank withdraws its quantitative easing programme.

Valiant Bank returned to the market last week to issue its second covered bond transaction which, like its first deal, was denominated in Swiss francs. Being double the size of the first deal, it showed potential demand for more.

Covered bond investors would be better off ensuring a full recovery and maturity extension than accepting a partial recovery and claiming the remainder from the insolvency estate of the issuer, according to delegates who voted at the IMN conference in London on Tuesday.