Covered Bonds

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.

Banco Santander Totta did well to raise €1bn of seven year funding on Thursday at a record level through govies, given the damaging ramifications for peripheral Europe that would follow if France’s far left and far right presidential candidates made it through to the second round of voting.

Portugal’s Banco Santander Totta has mandated leads for the first Portuguese covered bond since October 2015.

Banco Sabadell enjoyed a strong reception for its €1bn 10 year Cédulas which was priced on Wednesday, partly reflecting the paucity of Spanish covered bond supply, especially at the long end of the curve.

Banco Sabadell mandated leads on Tuesday for only the second Spanish Cédulas of the year which, by virtue of its rarity, is likely to be warmly received.