Covered Bonds

Specialist mortgage bank Muenchener Hypo (MuHyp) and savings bank Sparebanken Vest, which typically fund in covered bonds, are both looking for unsecured funding this week. MuHyp is looking to tap one of its strongly performing senior issues, while Sparebanken Vest is marketing its debut senior unsecured issue in euros.

SpareBank 1 Boligkreditt unearthed solid demand for its first covered bond in sterling, managing to price at the tight end of guidance with a comfortably oversubscribed book, despite issuing in the more challenging five year tenor.

Achmea Bank has mandated leads to market its inaugural conditional passthrough covered bond programme, with the bank eyeing a €500m seven year deal.

Around five borrowers are expected to launch covered bonds next week and take advantage of tight spreads, strong market conditions, an absence of holidays and fewer blackout periods.

A debut green bond from Swedbank this week was the clearest indicator yet that green bonds can price more tightly and outperform the rest of the FIG debt market, including perhaps covered bonds, writes Jasper Cox.

Covered bond supply should start to improve in the next two weeks, with European holidays and blackout periods coming to an end. But it is doubtful that the expected increase in volumes will be sustained for long enough to meet the 2017 annual supply forecasts many analysts made last year.

Covered bond investors have reduced their exposure to peripheral markets according to analysts at Commerzbank research. Despite this, peripheral and higher yielding covered bonds have continued to outperform and could easily remain susceptible to squeezes, traders warn. The technically squeezed status quo may not change until the second half of 2018, they added.

The Slovakian government has approved an updated version of its covered bond law but while this is likely to improve on the existing framework further work may be needed.

Sparkasse Hannover has joined Wüstenrot Bausparkasse in the euro covered bond pipeline. Both issuers are likely to get strong executions for their sub-benchmark Pfandbriefe which may no longer need to offer a premium relative to benchmark deals. At the same time, Sparebank 1 Boligkreditt has mandated leads to market its first covered bond in sterling.

Anastasios Ioannidis, general manager of global markets at Eurobank Ergasias’ treasury, speaks to GlobalCapital about his bank’s covered bond, the bank’s competitive advantages, plans for non-performing loan sales and how sustained growth can cure Greece’s debt mountain.

The third covered bond purchase programme (CBPP3) will continue to exert a strong influence on the covered bond market for at least the next three quarters, though a material change could well start to impact the market in the latter part of next year.

The prospect of Greek banks issuing tier two capital early next year was heightened this week after two more of the country's big four institutions successfully printed covered bonds, writes Bill Thornhill.