Covered Bonds

Crédit Agricole Cariparma issued a €750m eight year Obbligazioni Bancarie Garantite on Monday at the tightest spread to mid-swaps for an Italian deal since the sovereign credit crisis.

Finland’s Oma Savings Bank found strong demand for a debut covered bond on Monday which, because of its sub-benchmark size, offered a sizeable premium to any other Finnish benchmark.

Royal Bank of Canada not only found good demand in a larger than average size for its five year sterling covered bond on Friday, but also executed the trade at considerable cost advantage compared with dollars and euros.

TSB Bank has issued its first covered bond, and a generous starting spread ensured that the deal attracted the highest oversubscription of any sterling covered bond this year.

Stadshypotek returned to the covered bond market for the third time this year to issue its second seven year at the tightest ever spread to mid-swaps. But the fact leads took so long to decide on the deal size hinted that execution had not gone smoothly.

Santander Consumer Bank managed to attract a comfortably oversubscribed order book for a tightly priced, sub-benchmark debut Pfandbrief on Tuesday.

The European Central Bank will stop buying conditional pass-through (CPT) covered bonds from sub-investment grade issuers from February 2018.

The European Commission needs to take a close look at which types of covered bond are eligible for the Liquidity Coverage Ratio (LCR) which, until the European Banking Authority’s (EBS) intervention, had been pretty obvious.

Deutsche Pfandbriefbank (PBB) issued an opportunistic £450m three year sterling covered bond on Tuesday. The funding proceeds provided a currency match for the bank’s sterling assets, with the cost being reasonably close to what it could have achieved in euros.

TSB Bank (TSB) has mandated leads to market its inaugural covered bond. At the same time Moody’s has rated the programme at Aaa.

Berlin Hyp (BHH) showed this week that investors are so hungry for short dated covered bonds that they are prepared to pay a negative yield for the privilege of owning them. Even so, it is unlikely that any other issuer will meet this extraordinary demand, writes Bill Thornhill.

Sbanken Boligkreditt, formally known as Skandiabanken, has said that it expects to take advantage of its newly established Euro Medium Term Note (MTN) programme for long-term funding to begin issuing euro denominated covered bonds.