Covered Bonds

Covered bond supply is likely to recover over the next week or two, particularly in core Europe where spreads to Bunds have become more attractive, which bodes well for DH Hyp’s forthcoming Pfandbrief. But for non-eurozone issuers, senior funding is likely to prove more attractive.

TSB Bank has received regulatory approval and a rating for a £5bn residential mortgage-backed covered bond programme, the first new programme from a UK issuer since 2011.

Oversea-Chinese Banking Corporation (OCBC) has mandated leads to roadshow its debut covered bond. The announcement comes ahead of what is expected to be a relatively quiet week ahead reflecting German holidays and improved funding conditions for senior unsecured.

The Bank of England plans to start later this year examining more closely the banking sector’s exposure to risk from climate change. That means banks will have to start telling the regulator more about the risks they face and how they manage them.

Landesbank Baden-Württemberg and WL Bank successively priced the tightest covered bonds of the year this week and both were able to tighten pricing to a greater extent than any previous German issuer.

United Overseas Bank this week became the first issuer to price covered bonds simultaneously in euros and dollars, helping it to attract new, especially Asian, investors.

GlobalCapital interviews covered bond traders, Jonas Klink and Jordi Cabero, to try and find out how after only three years, Santander has become a dominant force on the Street.

Natixis Pfandbriefbank raised five year funding through its German subsidiary on Thursday and paid a more attractive concession than usual because of the deal’s sub-benchmark size. Despite perceived illiquidity, bid-offer spreads for sub-benchmark bonds are not much different to benchmark deals several weeks after launch, according to Citi research analysts.

CIF Euromortgage has completed the restructuring of its covered bond programme, to comply with recent amendments to the French covered bond law, remove RMBS from the cover pool and make its bonds comply with Capital Requirement Regulation (CRR).

United Overseas Bank issued a euro covered bond flat to its curve and WL Bank priced at the tightest spread of the year, suggesting slowing supply is exacerbating a squeeze on investors. UOB was also set to issue its first dollar-denominated covered bond.

The Asia debt market saw a fresh rush of dollar deals on Wednesday, with property names China Jinmao Holdings Group and Xinhu Zhongbao, as well as Singapore’s United Overseas Bank launching new deals.

United Overseas Bank in Singapore has mandated joint leads for its second covered bond, and the second issue from a Singaporean borrower this year. It may issue in euros or dollars, or potentially in both currencies. Overseas Chinese Banking Corporation is expected to follow later this year.