Covered Bonds

EU officials from various institutions are pushing to complete the ‘third pillar’ of the Banking Union, despite strong opposition from a number of public and private stakeholders.

Finnish covered bond issuer SP Mortgage Bank has appointed leads for a roadshow that is scheduled to finish in mid-October. As only two Finnish covered bonds have been issued this year, a warm reception is assured for the rare offering.

Piraeus Bank will privately place a €500m five year covered bond to three supranational agencies in order to support €700m of new lending to small and medium sized companies across Greece.

This week’s slate of covered bonds saw record after record broken — a mania that was evident across the whole FIG sector. With European rates set to remain at their lows throughout next year and the macroeconomic backdrop continuing to improve, it is difficult to see what could spoil the party.

Oversea-Chinese Banking Corporation (OCBC) issued a €500m five year covered bond on Thursday that was more oversubscribed than any previous Singaporean deal and priced inside fair value in what a lead manager described as ‘a one-way market’.

NordLB received a higher level of demand for a €500m seven year Pfandbrief this week than in its previous two deals, showing it has good access to capital markets despite challenges it faces dealing with a €9bn bad shipping loan portfolio.

Oversea-Chinese Banking Corporation (OCBC) and NordLB have signalled their intention to exploit exceptionally strong covered bond market conditions and open order books for transactions on Thursday.

Deutsche Apotheker und Aerztebank (Deutsche Apo) issued the tightest German 10 year Pfandbrief of the year on Wednesday at a level that was probably through interpolated fair value.

Aareal Bank managed to attract orders of more than £550m for its £250m Pfandbrief, reflecting the fact that the bonds offer tremendous value relative to senior unsecured and corporate debt. The deal followed a tap of similar size issued by Swedbank.

Caixa Económica Montepio Geral has mandated lead managers to market the first publicly syndicated Portuguese conditional pass through (CPT) covered bond using a structure that is somewhat different to Dutch CPTs.

The subscription ratio of a seven year covered bond issued by SR Boligkreditt this week was higher than any Norwegian deal issued in at least six years.

Credit Mutuel Arkéa (CM-Arkéa) this week issued the tightest French 10 year covered bond in euros this year with a deal that gave funding that was cheaper than anything it had previously issued.