Covered Bonds

Covered bonds issued this week undermine the assumption that peripheral markets are likely to be more vulnerable to a spread widening when the European Central Bank cuts net purchases to zero under the covered bond purchase programme (CBPP3).

Landesbank Hessen-Thueringen Girozentrale (Helaba) and Sparkasse Pforzheim Calw have mandated leads for Pfandbrief transactions to be launched on Thursday.

Deutsche Hypo returned to the covered bond market on Tuesday, following the wake of a series of German borrowers last week, to issue a four year tap. Although the pipeline is empty, 'the floor is wide open’ for an opportunistic issuer to follow on Wednesday.

Rabobank returned to the covered bond market on Tuesday to issue the tightest €1bn-plus sized triple-A rated 10 year since the crisis.

La Banque Postale (LBP) managed to find good demand for a 10 year covered bond on Monday even though the spread to OATs has tightened and could become problematic.

Bankinter followed last week’s blow out sovereign issue from the Kingdom of Spain to launch a covered bond on Monday. With an unreconciled order book of €1.6bn and little price sensitivity, the offering contrasted starkly to earlier peripheral covered bonds seen this year.

Norway's SpareBank 1 Boligkreditt this week issued the first covered bond secured solely on energy-efficient green residential homes. The transaction not only provides a solid template for other Norwegian borrowers, but may well lay the groundwork for covered bond and RMBS issuers throughout Europe.

Alpha Bank was inundated with demand for its debut covered bond, benefiting from a series of positive credit events that have boosted the Greek sovereign, thereby enabling the issuer to print a considerably longer benchmark at a lower yield than its peers — and with much more demand.

Crédit Mutuel CIC issued a €1bn eight year covered bond on Wednesday, but with limited orders some bankers feared the transaction was one of the shakiest seen yet in 2018.

DekaBank, BayernLB, Berlin Hyp and Deutsche Pfandbriefbank took the opportunity to issue in small sizes across the full range of maturities with deals that were all priced with a double digit spread through mid-swaps.

Norway's SpareBank 1 Boligkreditt has issued the first covered bond secured solely on energy-efficient green homes. The €1bn transaction was priced almost flat to fair value and placed with a newly diversified group of investors.

Sterling covered bond supply so far this year has been high but Toronto Dominion Bank showed on Monday that demand was also plentiful, as it issued another tightly priced transaction with a strong book.