Covered Bonds
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LBBW has mandated leads for its first dollar covered bond benchmark of the year. The public sector-backed Reg S transaction is expected to be launched in the near future. -
Almost 18% of this year’s expected covered bond supply has now been issued and it seems likely that the pace in the primary market will begin to moderate. With less new supply, there could be more technical squeezes on the way
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La Banque Postale (LBP) and Axa Bank Europe SCF priced French covered bonds this week. Axa’s may be its last before it restructures its programme.
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SpareBank1 Boligkreditt, Aareal Bank and Nordea took advantage of strong demand for five year paper to issue oversubscribed deals this week, paying virtually no new issue concession.
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Royal Bank of Canada is set to become the first covered bond issuer in Canada to join the Covered Bond Label initiative.
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DBS Bank issued its long-awaited debut euro benchmark this week with a choice of tenor and pricing that worked well for for the Singaporean lender. It may return later this year.
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The European Bank for Reconstruction and Development has invested in its first Slovak covered bond and is working with local regulators to update the local covered bond law.
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Sparebank 1 Boligkreditt and Aareal Bank issued well oversubscribed covered bonds on Wednesday, paying virtually no new issue concession. Both banks took advantage of enduring demand for five year tenors, while for Aareal the issue was cheaper than the European Central Bank’s term liquidity.
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After a glut of long-dated covered bonds in 2016, investors are scrambling to bring the duration of their portfolio down again, and that means five year covered bonds are likely to remain a firm favourite. More issuers should turn down the ECB's TLTRO, and try covered bonds instead.
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The German real estate lender, Aareal Bank, has mandated leads for a euro-denominated five year German mortgage-backed covered bond.
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The French issuer, Axa Bank, has launched a sub benchmark covered bond with a 15 year maturity which closely matches the long dated assets on its balance sheet. This deal is likely to be the last deal under the present structure of its covered bond programme.
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Royal Bank of Canada is set to become the first covered bond issuer in Canada to join the Covered Bond Label initiative.
