Covered Bonds

Santander UK quickly built a well oversubscribed order book for its €1bn sterling covered bond on Thursday. The deal was set to be priced with a minimal concession at a favourable level versus where it might have been issued in euros, boding well for Royal Bank of Scotland’s forthcoming transaction.

After a six year absence Royal Bank of Scotland could be set to issue its first covered bond in euros and has mandated leads for roadshow with a view to issuing a euro or sterling benchmark, or both.

Swedbank took advantage of strong market conditions to issue its second covered bond of the year which was priced with a negligible concession and extended its curve.

Crédit Agricole issued the largest covered bond in three months, and despite pricing through OATs, it attracted the biggest order book in more than two years for a deal of this size.

Senior preferred could prove a much more enduring threat to the viability of the covered bond market than the targeted longer-term refinancing operation (TLTRO) or the covered bond purchase programme (CBPP3).

Yapi ve Kredi Bankasi looks set to take advantage of the bullish mood that has followed Turkey’s recent referendum and plans to issue its debut euro covered bond and what will be the second ever mortgage covered bond from Turkey.

UniCredit subsidiary, HVB, issued a tightly priced euro Pfandbrief at the long end of the curve on Tuesday, while Deutsche Pfandbriefbank (Pbb) issued at the short end in dollars but paid up for the privilege compared to what it would have cost in euros.

Deutsche Pfandbriefbank (Pbb) is expected to open order books for a three year Reg S dollar Pfandbrief on Tuesday. Meanwhile, Poland's PKO Hipoteczny has opened order books for zloty denominated five year.

French and European periphery covered bond spreads were tighter on Monday following the result of the French presidential election first round vote. Bankers have urged issuers to take advantage of the bounce to secure funding.

The first German building society is poised to enter the Pfandbrief business, two Canadian banks have substantially increased the size of their covered bond programmes and prospective downgrades of NordLB’s covered bonds may not necessarily lead to a spread widening said analysts at Commerzbank, UniCredit and Citi this week.

Rare covered bond issuers from Portugal and Spain made a surprise return to the market this week after long absences with transactions that, under the circumstances, were very well received.

The European Covered Bond Council has restated its support for the concept of a high quality principle-based covered bond framework and warned against altering the preferential regulatory status of the asset class.