Covered Bonds

After selling a green mortgage-backed covered bond to the International Financial Corporation and the European Bank for Reconstruction and Development (EBRD), Garanti Bank expects to sell its first publicly syndicated euro benchmark.

After selling $150m of green residential mortgage-backed covered bonds to the International Financial Corporation, Garanti Bank expects to sell another deal to the European Bank for Reconstruction and Development.

Canadian Imperial Bank of Commerce issued a $1.75bn five year dollar covered bond on Thursday, its first since 2015 and the third of the same size and tenor from a Canadian bank this year.

Market participants await this Thursday’s European Central Bank meeting for clues on a tapering of asset purchases, which has in fact already begun in covered bonds. But for now, spreads remain tight.

It’s hard to attack green finance, because its aims are so noble. But when institutions use environmental aims to argue they deserve special subsidies, it tarnishes the whole market. Prudential regulation should stick to being prudential.

DBRS on Tuesday announced a methodology for rating transactions backed by public sector loans, a move that may help Portuguese issuers access cheaper repo funding.

More borrowers will likely want to emulate the successes of last week’s sterling covered bonds issued by two Canadian banks. After rumours that a UK bank was looking to tap the market soon, Nordea Eiendomskreditt has updated its covered bond programme.

The Energy efficient mortgage Action Plan (EeMAP) launched its initiative on Monday, with a new website to promote the delivery of energy efficient mortgages — which could then collateralize green covered bonds or RMBS.

The Cover and GlobalCapital’s covered bond awards are now open. The following lists show the number of shortlist nominations and those that were actually shortlisted.

A surfeit of sterling liquidity drove demand for covered bonds to new heights this week with exceptional deal executions seen in two Canadian bank transactions, raising the likelihood that a UK bank will soon follow.

At current spreads UK covered bonds still offer good value even though a rise in the UK counter-cyclical capital buffer (CCyB) means international investors will incur a higher capital charge in buying the deal, said analysts at Citi.

Seven years after first being mooted, draft Moroccan covered bond legislation is expected to emerge in the first half of next year, when it could be followed by supply. Fitch Ratings believes covered bonds will spur retail mortgage lending and will have a positive credit impact on banks.