Covered Bonds

Landesbank Hessen-Thüringen (Helaba) has returned to the Pfandbrief market for the second time this year to issue a dual tranche offering, with the shorter five year part pricing 3bp wider than a six year launched a few weeks ago.

Bayerische Landesbank (BayernLB) issued a €500m seven year in line with recent German Pfandbrief this week, but with a generous pick-up of 5bp compared with its own more illiquid curve.

The European Commission’s proposals for a principles-based covered bond directive have been broadly welcomed, but the lack of detail on assets that might be eligible for covered bonds has caused concern.

Vakifbank has privately placed its third Turkish lira denominated covered bond to international investment banks. The deals, which provided competitive long-term funding and came in response to onerous swaps market regulation, are likely to be mimicked by Turkey’s other main lenders.

Deutsche Pfandbriefbank’s (PBB) decision to issue a five year covered bond this week, instead of the more usual staple of seven or eight year deals, meant it was able to issue in a larger than normal size and pay little new issue premium.

Oversea-Chinese Banking Corp issued a five year sterling floating rate bond on Wednesday but was unable to match the size or spread of United Overseas Bank, which recently issued the first Singaporean covered bond in sterling.

Bank of Ireland enjoyed strong demand for its first covered bond issue for over two years on Wednesday, pricing the deal at its tightest spread over the French covered bond market since the sovereign credit crisis.

Rising uncertainty around the global macroeconomic outlook has been feeding into the financial institutions bond market in recent weeks, pushing new issue premiums higher and forcing investors to become more selective about the bonds they invest in.

Bank of Ireland is planning to bring the first covered bond from Ireland in over two years, while Overseas Chinese Banking Corporation is lining up a debut trade in sterling.

National Bank of Canada and Commerzbank both came to the market with seven year covered bonds on Tuesday.

Commerzbank has mandated joint leads for a seven year mortgage backed Pfandbrief.

Toronto Dominion Bank this week issued a €1.25bn short five year euro covered bond with a modest concession that matched the record tightest Canadian euro covered bond spread, albeit with a rather low subscription ratio.