Covered Bonds

Bankers expect two or three deals to emerge next week to take advantage of a strong market with no major events due that could cause disruption. It is the perfect window for those with a need to push on with their funding requirements before the onset of summer when execution can become trickier.

TD Securities has hired a trader to cover the euro SSA and covered bond markets, adding euro capacity to a bank that has focused mainly on dollars and other currencies so far. But SSA bankers warned that if the firm plans to break into the euro primary market, it could face a tough time.

Recently de-merged Kommunalkredit Austria (KA) has mandated leads to roadshow the first social covered bond ever to be issued from a public sector programme, and the first green bond from Austria. Rated Baa2, it is also set to be one of the weakest credits in the covered bond universe.

TD Securities has hired a trader to cover the euro SSA and covered bond markets, adding euro capacity to a bank that has focused mainly on dollars and other currencies so far.

La Banque Postale (LBP) attracted strong demand for its 10 year covered bond issued on Wednesday and priced the deal flat to where compatriot Crédit Agricole’s 10 year was trading in the secondary market.

Deutsche Hypo managed to attract only a just subscribed order book for its €500m eight year covered bond this week, despite paying an attractive new issue premium. Bankers on the deal dismissed concern that uncertainty over the issuer’s future ownership had worried investors and blamed market conditions instead.

Deutsche Hypothekenbank has mandated leads for its first deal of the year, weeks after its owner NordLB said it was considering a sale of the bank. The high quality cover pool and choice of German law as the governing code will stand the deal in good stead, but uncertainty over borrower's future ownership could complicate matters.

SEB issued a tightly priced €1bn seven year covered bond on Tuesday, but the slim scale of oversubscription reflected investors’ resistance in the fatigued market.

Covered bond supply is expected to remain active as borrowers are planning strategic deals ahead of the half year end. Leeds Building Society is the latest issuer to add its name to the pipeline.

The Swedish financial supervisory authority (Finansinspektionen) has proposed tightening mortgage lending criteria in an effort to slow growth in household debt, a decision which analysts believe is likely to be positive for covered bonds.

The European Commission (EC) has confirmed it wants to create a more integrated covered bond framework in the European Union and explore the possibility of developing a market for European Secured Notes. Proposed amendments to the framework are likely to prove 'controversial', said market participants.

The Bank of Queensland (BOQ) has mandated joint leads to roadshow its newly set up conditional pass-through (CPT) A$3.25bn (€2.18bn) covered bond programme.