Covered Bonds

Including redemptions and central bank buying the investable eurozone covered bond market has shrunk almost €80bn so far this year. No surprise then that seven year deals issued on Thursday by Banco Sabadell and Bank of Montreal were swamped and priced with virtually no concession.

After mandating leads on Wednesday, Bank of Montreal is set to open books on Thursday for what will become the longest Canadian covered bond in euros. Having issued three year and five year deals this year, BMO’s fourth trade of 2016 will be a curve extending seven year.

Maturing deals issued by Washington Mutual and National Bank of Greece show covered bonds doing precisely what they're supposed to — redeem in full and on time.

Covered bond supply on Tuesday hit a pause. A number of issuers are monitoring the market and a second euro benchmark could well be announced later this week. In the meantime, secondary market flows have improved with buyers of New Zealand and French bonds noted.

On Monday Spain's Ibercaja returned to the covered bond market for the first time since 2010 to issue the tightest Spanish deal this year. Although the book contained fewer orders than many Spanish covered bonds, the scale of excess demand was above average.

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Oberösterreichische Landesbank (OÖ LB) has mandated joint leads for a sub-benchmark sized euro covered bond with an intermediate to long maturity.

The Dutch lender has mandated leads for an ultra-long soft bullet covered bond which will follow a roadshow due to begin next week.

The French owned Belgian bank has appointed leads to market its first legally compliant covered bond that is backed by Belgian mortgages.

The covered bond pipeline grew this week as Ibercaja and BNP Paribas Fortis mandated leads for roadshows and Nordea signalled it could be ready to return soon.

ASB Bank extended its euro curve with a tightly priced seven year. But with half the demand that was seen in the previous seven year from a New Zealand bank, its size ambition was thwarted.

The Italian subsidiary of Crédit Agricole has issued the longest Obbligazioni Bancarie Garantite ever seen with a dual tranche offering that boasted one of the most granular distributions.