Covered Bonds

The triumphant return of Banco Comercial Português to the covered bond market this week after an eight year absence marks a turning point, not just for the bank but the Obrigações Hipotecárias market as a whole.

Amended Slovakian covered bond legislation, set to come into effect in January 2018, will lay the foundation for a robust internationally focused market leading to greater volume, delegates at the CEE Covered Bond Forum in London heard this week.

Secondary markets were trading stably on Wednesday, and although non-eurozone bonds were better offered, dealers expressed confidence that spreads would squeeze tighter over the summer months.

Public holidays will cut short the issuance window at the end of May, but banks have enjoyed a busy month and a flurry of deals have arrived in the market this week.

Banco Comercial Portugues returned to the covered bond market after an eight year absence on Tuesday, selling a €1bn five year deal.

Moody’s now takes a more lenient approach to rating covered bonds compared to newcomer DBRS, DZ Bank covered bond research analysts have revealed. The change should help protect its share of the market which may be shrinking due to the prevalence of covered bonds with only one rating.

Moody’s ratings for covered bonds are now almost as lenient as newcomer DBRS, DZ Bank covered bond research analysts have revealed. The change should help protect its share of the market which may be shrinking due to the prevalence of single covered bond ratings.

Matej Chytil has left Crédit Agricole’s covered bond trading team to return to National Bank of Slovakia where he used to work.

Sparebanken Sør Boligkreditt issued its second ever covered bond and, similar to deals issued last week, was able to price flat to its curve. But its bonds are not eligible for the ECB's purchase programme, unlike some of last week's tightest issues, which could limit performance potential.

The robust demand that Rabobank reeled in for its two part debut covered bond issued on Monday provided the basis for an aggressive spread tightening, especially in the longer-dated tranche.

Sparebanken Sør Boligkreditt finishes its roadshow on Friday and is expected to issue a €500m deal early next week said leads. Banco Comercial Portugues and Rabobank also finish their roadshows on Friday and could well be expected to emerge next week.

The benefits of covered bond harmonisation far outweigh the costs, according to an independent report undertaken on behalf of the European Commission and published on Friday.