Covered Bonds

Garanti Bank is expected to issue the first green mortgage-backed Turkish covered bond, which will be privately placed with the International Financial Corporation (IFC) and certified by a third party.

Berlin Hypothekenbank (BHH) is expected to issue its second green Pfandbrief next week alongside one or two other transactions. The new issues follow an eventful May, while June could also prove a busy month.

Nationale-Nederlanden Bank (NN Bank) has registered its covered bond company, suggesting it plans to follow Rabobank with a debut deal. The move could lead to less Dutch RMBS supply, where it had been a regular issuer alongside Delta Lloyd, with which it is merging.

Commerzbank has signalled its intention to formally pull out of the ship Pfandbrief business, while NordLB is considering a sale of Deutsche Hypo to shore up capital after absorbing BremerLB’s loss-making shipping business.

Intesa Sanpaolo was unable to tighten pricing for its barely subscribed €1bn 10 year Obbligazioni Bancarie Garantite on Wednesday as mounting political risk in Italy caused a distinct change in sentiment.

Møre Boligkreditt found strong demand for its first euro covered bond which, because of its sub-benchmark size, offered substantially more spread than similar bonds. At the same time BayernLB said it would start a roadshow for a sterling senior unsecured and covered bond.

BPCE outplayed OP Mortgage Bank in the covered bond market on Tuesday with a €1bn 12 year that benefited from the steepness of the French curve and an eye-catching double-digit spread.

Investors, issuers and bankers came together in April for the GlobalCapital/Crédit Agricole CIB covered bond roundtable to discuss the key factors facing the market over the next 12 months.

Turkish legislation has been in place for years and six borrowers have set up covered bond programmes, but so far supply has proved fleeting. Nevertheless, delegates at the CEE Covered Bond Forum in London heard this week that the challenges that held the market back are likely to disappear soon.

Moody’s covered bond ratings are now almost as lenient as those of DBRS, which shouldn’t weaken faith in either agency — arguably, it is Fitch and S&P that have lagged behind. But as the ECB stops buying, trust in ratings will be all the more important.

Sparebanken Sør Boligkreditt and Société Générale enjoyed solid receptions for their covered bonds this week, with the Norwegian issuer pricing flat to its curve.

Investors flocked to Rabobank’s first covered bond on Monday even though it was was priced tighter than any other non-German deal by a considerable margin.