Covered Bonds

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.

The Polish subsidiary of Commerzbank, mBank, has published the base prospectus for its €3bn covered bond programme, suggesting it could be ready to start a marketing drive leading to its first euro-denominated publicly syndicated deal.

On Tuesday, Bank of Montreal (BMO) issued the largest sterling covered bond from an overseas bank in almost three years at the tightest spread of any sterling covered bond in over two years. The level BMO achieved was far cheaper than would have been possible in euros or dollars.

HSH Nordbank issued a tightly priced €500m three year Pfandbrief on Tuesday. The transaction illustrates confidence in the safety of the Pfandbrief market, though little about conditions at the issuer.

The Canadian Imperial Bank of Commerce (CIBC) issued the largest and longest sterling Canadian covered bond seen this year on Monday and saved itself almost 10bp compared to where it could have funded in dollars and euros.

Crédit Agricole acted opportunistically on Monday on the back of last week’s bond sell-off to issue the first non-Swiss covered bond in Swiss francs since January 2016.

CaixaBank quietly priced a Cédulas Hipotecarias issue on Friday, only 3bp wider than where Nationwide recently issued. At 1.5%, the yield will have attracted big German insurers and at 33bp over mid-swaps the 15 year duration offered great funding for the borrower, especially in the context of a potential end to the European Central Bank's Covered Bond Purchase Programme.