Covered Bonds

Caffil enjoyed very strong demand for a two tranche covered bond offering on Wednesday and showed just how much the squeezed technical backdrop is forcing investors' hands.

Westpac has mandated leads for a roadshow to look at issuing a senior unsecured or covered bond in euros. The tight spread between the two asset classes could restrict covered bond supply.

Münchener Hypothekenbank issued a comfortably oversubscribed €500m 10 year Pfandbrief on Tuesday, and priced the deal with a small concession and a decent amount of central bank support.

After rallying hard over the past week covered bond spreads have begun to stabilise, especially in France where Credit Agricole’s well-performing €1.5bn 10 year helped sate appetite. Traders reported bigger price dislocations in the peripheral covered bond market.

Yapi ve Kredi Bankasi said it plans to press ahead with its debut euro covered bond, and after getting regulatory approval Turkiye Is Bankasi (Isbank) has had its programme rated by Moody’s.

Crédit Agricole issued one of three euro benchmark covered bonds this week, attracting demand that topped the combined interest seen in deals issued by Swedbank and HVB.

Santander UK found strong demand for one of its largest ever sterling covered bonds on Thursday and paved the way for Royal Bank of Scotland which is expected with its first deal in more than five years.

Turkiye Is Bankasi (Isbank) has had its mortgage covered bond programme signed off with the Turkish regulator and this week had the programme rated by Moody’s.

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.