Covered Bonds

Germany’s WL Bank priced a €250m tap of its 10 year mortgage backed Pfandbrief on Thursday, taking advantage of the squeezed market to price flat to its curve. Cheaper French covered bonds have performed well lately and profit taking was seen in the UK sector.

The heads of funding at DNB Boligkreditt and Royal Bank of Canada told delegates at this week’s IMN conference that investors are well protected from a potential fall in house prices. UK covered bonds are similarly resilient, said a director at Fitch Ratings. And even in a hard Brexit, the privileged position of covered bonds would be upheld by UK courts, said a partner at Clifford Chance.

SR Boligkreditt has issued its first Reg S dollar covered bond, and though the book was slow to build the issuer found enough demand to ensure the deal was eligible for bank liquidity portfolios in the liquidity coverage ratio (LCR).

FIG borrowers have wasted little time in bringing opportunistic offerings in front of investors this week, using strong issuance conditions to complete a number of projects ahead of the Easter break.

Delegates attending the 10th annual IMN covered bond conference in London on Tuesday were unperturbed by the possible end of the ECB's covered bond purchase programme (CBPP3).

SR Boligkreditt is set to follow its Scandinavian peers and has mandated leads for its debut Reg S covered bond in dollars.

Yorkshire Building Society issued a €500m six year covered bond almost flat to its curve with strong demand on Monday. At the same time Commonwealth Bank of Australia priced a €750m seven year, a solid trade but one that lacked sparkle.

Yorkshire Building Society could kick-start covered bond issuance in the second quarter, as it lines up to sell its first deal in the format since late 2015.

Westpac NZ issued a chunky €1bn euro covered bond on Thursday, with leads adopting a cautious approach to pricing at first, tightening the deal by 5bp in syndication to reach a record spread for a New Zealand issuer in euros.

Westpac Securities NZ has mandated banks for a new five year euro covered bond after finishing a roadshow this week.

Swedish issuer Stadshypotek is hitting the dollar market for five year covered bond funding on Wednesday, following the success of DNB Boligkreditt’s trade last week.

No banks had issued new senior or subordinated deals in euros or dollars by mid-week, as market participants blamed a heavy take-up in the final round of the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO II).