Covered Bonds

The European Commission's College of Commissioners is expected to vote on the long-expected pan-European covered bond directive soon and the final paper is due around mid-March. Though it is likely that reforms will be needed, these are not expected to present a major challenge said bankers closely involved with the process.

KBC became the first Belgium bank to issue a covered bond this year, attracting moderate demand despite a seemingly generous new issue premium.

The German Laender owners of HSH Nordbank sold the bank this week in a move that bodes well for the performance of its Pfandbriefe and may improve its market access, said analysts at Commerzbank.

Yapi Kredi has privately placed Turkish mortgage backed covered bonds to the European Bank for Reconstruction and Development (EBRD) and Clean Technology Fund (CTF) to promote energy saving improvements in the financial sector.

De Volksbank enjoyed a strong reception for its 10 year benchmark covered bond and, in contrast to unsecured French and UK deals being sold simultaneously, the smooth execution showed the asset class is a “rainy day” product.

Crédit Agricole has hired a banker from SEB to join its FIG syndicate team in London.

The case for investing in Italy’s banks is unlikely to be radically altered by the outcome of the country’s general election on Sunday, March 4, according to some FIG bond buyers.

In what is likely to be seen as a warning shot to covered bond issuers, the European Central Bank has excluded the covered bonds issued by Anadi Bank for repo purposes.

Following an expansion in its mortgage lending business, German building society Bausparkasse Schwäbisch Hall (BSH) has announced plans to mimic Wüstenrot Bausparkasse and set up its own covered bond programme.

The long end has begun to rally in the rates market, and whilst this should boost longer dated covered bonds, traders are not convinced that there is scope for much flattening of the rates curve.

The outlook for Canadian covered bond supply in euros is not as grim as it seems, despite the fact that the nation’s lenders have already issued three quarters of what they supplied in euros In 2017, the cross currency basis swap is not particularly compelling and senior unsecured funding is cheap in dollars.

Syndicates have encountered some difficulty in placing financial institution bonds this week, but there is optimism in the face of widening spreads. This is just as well for HSBC’s plans to raise $5bn-$7bn of the most risky form of bank debt in the first half of the year.