Covered Bonds

After a long hiatus, the Italian financial institution bond market exploded into life with week with two covered bonds and one debut unsecured transaction. Though demand was clearly more nuanced for the second covered bond, bankers were hopeful others would soon follow. Bill Thornhill and Jasper Cox report.

Mediobanca followed Intesa into the Obbligazioni Bancarie Garantite (OBG) market on Thursday and, despite coming with an easier to sell shorter maturity, demand was down by almost two-thirds compared to the earlier deal. Even so, bankers have not ruled out the possibility that one or two Italian banks could soon follow.

Germany may have been kicked out of the FIFA World Cup but they still know how to issue a good Pfandbrief, according to a German lead manager who worked on HSH Nordbank’s five year Pfandbrief that was launched on Thursday alongside an Austrian deal — Raiffeisenlandesbank (RLB) Oberösterreich’s 10 year, which also achieved an excellent reception.

GlobalCapital requests that market participants nominate the best lead managers, issuers and deals for the voting shortlists for this year’s Covered Bond Awards. These should be submitted by July 8 and will be voted on by the market from late July to mid-August.

HSH Nordbank has mandated joint leads for a €500m five year mortgage backed Pfandbrief. Investors should benefit from a potential rating upgrade.

Stadshypotek issued a €1bn seven year on Wednesday marginally wider than where DNB Boligkreditt recently issued its much larger green inaugural deal in the same tenor. It followed a €500m five year from Sparebank Vest Boligkreditt.

Intesa Sanpaolo has issued the first Italian covered bond since January, reopening the market with a sizeable deal that is likely to be followed by a number of other Italian issuers.

Crédit Agricole and Münchener Hypothekenbank (MuHyp) found good demand for their covered bonds on Tuesday, but it was Crédit Agricole’s transaction that really stood out by virtue of its size and maturity, which until now had been viewed with trepidation.

Sparebanken Vest Boligkreditt has mandated joint leads for a five year euro benchmark covered bond that will likely launch on Tuesday.

Compagnie de Financement Foncier (CFF), which had financed the mortgage and public sector lending activities of Crédit Foncier and BPCE Group, will in future issue Obligations Foncières to refinance only the public sector assets of the BPCE Group.

Berlin Hyp (BHH) was on Monday set to issue its largest covered bond in four years, and with the shortest tenor of any European deal so far this year.

Berlin Hyp AG (BHH) has mandated joint leads for its third deal of the year, and the shortest maturing covered bond issued in euros from a eurozone bank in 2018. The appealing tenor and lack of guidance on deal size raises the possibility of a larger than usual transaction size.