Covered Bonds

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.

Despite mounting evidence of falling Swedish house prices and the likelihood that orders were lost at the re-offer spread, Swedish Covered Bond Corporation (SCBC) issued its tightest covered bond on Monday.

The Swedish Covered Bond Corporation has mandated joint leads for a seven year euro benchmark which is likely to be launched on Monday. The deal will be closely watched to see how it compares with Stadshypotek, which issued a seven year to a lacklustre reception in November.

Alpha Bank has mandated leads for the third publicly syndicated Greek covered bond in three months. But in contrast to the first two deals, it has chosen a longer maturity with a soft bullet structure, instead of a conditional pass through.

Primary covered bond sales have gone smoothly so far this year, with borrowers continuing to pay negligible new issue premiums and still attracting comfortably oversubscribed order books. But look a little closer and its clear there’s been a perceptible change. Investors are fighting back, and beginning to get their way.