Covered Bonds

Toronto-Dominion Bank and Bank of Nova Scotia issued dollar and euro covered bonds on Monday, respectively, with both issuers targeting the five year part of the curve.

German Landesbank NordLB issued a €500m 10 year Pfandbrief backed by public sector loans on Monday. The deal had a narrowly oversubscribed order book despite offering a fair new issue concession. Meanwhile, Austria's Erste Bank has mandated leads for a Pfandbrief backed by mortgages.

Swedbank and Swedish Covered Bond Corporation rapidly attracted solid oversubscriptions for their €1bn five and seven year covered bonds that were priced with a minimal concession on Monday.

Lloyds Bank tapped the covered bond market for a three year floating rate deal on Monday, the fourth year in a row that it has issued the instrument in early January.

Investor Access, a platform which allows investors to submit orders for a new bond issue directly into the order book was deployed for the first time last week on a Commonwealth Bank of Australia sterling covered bond. Now work is underway to convince more dealers of the initiative’s worth.

The dollar covered bond market is in good shape, and it seems likely that issuers will want to follow the success of Bank of Montreal which last Wednesday issued the first benchmark of the year at a cheaper cost and in larger size than its previous deal issued six month ago.

The Swedish Covered Bond Corporation mandated leads for a euro covered bond benchmark as market participants prepare for another hectic week, following a substantial curve steepening this week.

Covered bond issuers from Europe’s core accessed the market across a range of intermediate tenors this week with LBBW, Compagnie de Financement Foncier (CFF) and Helaba issuing some of their largest deals in years.

DNB Boligkreditt got the Nordic covered bond market off to a blistering start on Wednesday with a €2bn five year deal that leads were able to tighten by 5bp from initial guidance.

Coventry Building Society received a strong reception for the first euro-denominated covered bond from a UK issuer since the UK Brexit referendum. Despite cheaper funding alternatives, the deal demonstrated Coventry’s strategic commitment to the euro market.

Four covered bonds issuers raised almost €6bn between them at the long end of the curve this week, suggesting borrowers are prioritising tougher, longer duration deals. And while conditions permit some are issuing in the largest size possible.

Royal Bank of Canada, Canadian Imperial Bank of Commerce, Commonwealth Bank of Australia and Deutsche Pfandbriefbank tapped the sterling covered bond market this week at cheaper levels than they could have achieved in euros and dollars.