Covered Bonds

Bank of Montreal (BMO) became the first Canadian name to issue a covered bond in euros since March with a €1.5bn trade on Thursday.

Helaba faced few difficulties on Thursday with a €250m tap of a ten year bond.

The European Commission has asked the European Banking Authority (EBA) to consider how European Secured Notes (ESNs) should be treated for regulatory purposes. The future of ESNs is expected to depend on their regulatory treatment, bankers said.

KBC Bank took full advantage of limited Belgian covered bond supply this year to radically tighten pricing for its first deal of the year, only the second Pandbrieven of 2017.

SP Mortgage Bank’s second covered bond brought in many new investors enabling the transaction to price inside interpolated fair value. With more buyers chasing this name and more trading desks expected to quote it, SP’s curve has a fair chance of repricing tighter.

Eurobank Ergasias has mandated leads for a roadshow, marketing a near replica transaction of National Bank of Greece’s (NBG) three year conditional pass-through that was issued last week.

Muenchener Hypothekenbank (MuHyp) doubled the size of its 10 year Pfandbrief tap despite pricing it at extremely tight levels, as SP Mortgage Bank announced plans to proceed with its second ever benchmark. Unlike SP's debut last year, the new deal will probably be priced through mid-swaps.

Covered bond investors are stoical on the outlook for Catalonia and prospective asset tapering. But one was less enamoured with deals issued this week by National Bank of Greece and Caixa Económica Montepio Geral.

National Bank of Greece showed this week that a covered bond does not need to have an investment grade rating to be a success. By implication the product has almost unlimited funding potential for a broad swathe of global issuers, particularly those from the emerging markets, writes Bill Thornhill.

Improved investor confidence in Italy has been conducive to issuance, although some trades remain domestically focused.

The National Bank of Greece’s €750m three year conditional pass through (CPT) covered bond does not include an investor put option. Although the programme allows for put options it was not used in this week’s deal and is unlikely to be used in future deals, according to the head of covered bond structuring at UBS which arranged the transaction.

Korea Housing and Finance Corporation (KHFC) has mandated lead managers to arrange a roadshow for an Aa1 rated five year dollar covered bond.