Covered Bonds

Korean Housing Finance Corp (KHFC) enjoyed a strong reception for a five year covered bond this week. But the fact the deal was priced 25bp inside initial price talk yet still offered triple the pick-up to Canadian deals compared with last year, suggested a degree of uncertainty in the price discovery process.

Korean Housing and Finance Corporation (KHFC) has opened order books in dollars, Muenchener Hypothekenbank (MuHyp) is set to price a small Swiss Franc deal and Piraeus Bank has finalised terms for its floating rate bond that was mainly placed with supranationals.

Deutsche Hypo has mandated leads to market its inaugural green Pfandbrief, taking the number of German green covered bond issuers to two. But since the bank could be soon bought by the only other green Pfandbrief issuer, the universe might well return to one.

Stadshypotek took advantage of scant covered bond supply — particularly from Sweden in the 10 year area — to issue a tightly priced €500m deal on Tuesday.

Eurobank Ergasias is set to issue its first covered bond some 80bp tight of the Greek sovereign, exactly mirroring the pricing differential that National Bank of Greece (NBG) achieved with its larger trade in the same tenor two weeks earlier.

WL Bank and Berlin Hyp this week followed last week's lead by Helaba, taking advantage of a quiet market and historically tight covered bond spreads to launch two tightly priced €250m Pfandbrief taps at the long end of the curve this week.

PKO Bank Hipoteczny has mandated for a Polish zloty-denominated covered bond deal, following on from mBank, which has issued Z1.5bn in the domestic market recently.

Eurobank Ergasias has mandated leads for a roadshow, marketing a near replica transaction of National Bank of Greece’s (NBG) three year conditional pass-through that was issued last week.

Bank of Montreal (BMO) became the first Canadian name to issue a covered bond in euros since March with a €1.5bn trade on Thursday.

Helaba faced few difficulties on Thursday with a €250m tap of a ten year bond.

The European Commission has asked the European Banking Authority (EBA) to consider how European Secured Notes (ESNs) should be treated for regulatory purposes. The future of ESNs is expected to depend on their regulatory treatment, bankers said.

KBC Bank took full advantage of limited Belgian covered bond supply this year to radically tighten pricing for its first deal of the year, only the second Pandbrieven of 2017.