Covered Bonds

Société Générale issued a tightly priced 10 year French covered bond on Wednesday with the €750m deal size, ensuring a solid level of excess demand and good potential for a stable performance.

Westpac has mandated leads for the third sterling five year floating rate covered bond from a bank outside the UK to be issued this year.

United Overseas Bank in Singapore was able to price a seven year euro covered bond in line with Westpac on Tuesday. Although UOB was unable to match the pricing of DBS Bank, it achieved 'remarkable traction' with second and third tier investors across Europe.

Caffil managed to attract a strong order book for its eight and 15 year covered bonds issued on Tuesday, largely because it paid careful attention to size, starting spread and tenor.

Erste Group attracted solid demand for its 10 year covered bond on Tuesday and, by pricing the transaction with a relatively slim new issue premium, it helped assuage concerns about the appropriateness of this tenor that followed deals issued last week.

The pace of covered bond supply is expected to remain fast on Tuesday, with as many as three issuers mandating lead managers for benchmark deals.

Crédit Agricole SFH took advantage of curve steepness to issue a €1.25bn eight year which, unlike recent 10 year deals, managed to attract strong demand from bank investors buying for their liquidity portfolios.

Unione di Banche Italiane (UBI Banca) wasted little time in following Crédit Agricole Cariparma with the second Italian Obbligazioni Bancarie Garantite of the year. The relatively small sized €500m tranches were just oversubscribed, reflecting the fact they were priced deeply through multiyear treasury bonds (BTPs).

The covered bond market looked weak on Friday with dealers reporting heavy selling flows as clients switched into new, cheaper bonds and reduced exposure in new issues where they had been over-allocated.

A thinly oversubscribed €1bn 10 year covered bond issued this week by Compagnie de Financement Foncier could mark the beginning of the end of the bull run in covered bonds. Bill Thornhill reports.

The sterling covered bond market enjoyed a strong start to the year, with four issuers raising a collective £3.7bn. Barclays priced the first deal of the year, which also happened to be one of the longest and largest.

Crédit Agricole Cariparma took advantage of the exceptionally tight spread environment to issue the first 20 year Obbligazioni Bancarie Garantite (OBG) on Thursday and completed the final leg of its 2018 funding requirement at a record spread through BTPs.