Covered Bonds

The European Central Bank is expected to announce a six month extension of its Covered Bond Purchase Programme when it meets on December 8. However, as the programme may end after that, credit curves could steepen and spreads could widen next year. GlobalCapital spoke to a number of funding officials and other bankers to gauge their views on the topic.

Compagnie de Financement Foncier’s deputy CEO Olivier Avis, and head of long term funding Paul Dudouit, speak to GlobalCapital about the bank’s funding, the end of the ECB's purchases — and how it has issued some of the longest deals ever seen in covered bonds.

Fitch believes the Chinese covered bond market could prove a viable new source of funding for its banks, but suggests that a legal framework would offer a more sustainable approach for the development of the market.

Overseas Chinese Banking Corporation will choose euros as its strategic currency of choice for covered bonds, according to chief financial officer, Darren Tan, who spoke to GlobalCapital along with OCBC group’s chief executive officer, Samuel Tsien.

The European Commission’s package of bank regulation measures, released on Wednesday and now dubbed ‘CRD V’, will ease regulations that threatened to mean ‘game over’ for the European repo market.

Coventry Building Society has mandated leads for a roadshow ahead of a possible €500m seven year covered bond. The announcement follows further rates volatility and the withdrawal of most bids in the secondary market.

SP Mortgage Bank got a strong response this week for its first covered bond, partly due to its defensive five year maturity, while Caffil did well to issue a 15 year deal despite soaring volatility.

The European Commission has presented proposals for the treatment of covered bonds in the net stable funding ratio (NSFR) that are more favourable than those outlined by the Basel Committee and may hasten the adoption of soft bullet and conditional pass through structures.

Oversea-Chinese Banking Corporation has established its $10bn covered bond programme, and with a top rating from both Moody’s and Fitch, it is only a matter of time before the bank issues its first covered bond.

Oversea-Chinese Banking Corp has become the last of the three big Singaporean lenders to pave the way for a covered bond, announcing a $10bn programme on Wednesday.

Caffil, the French public sector covered bond borrower, has issued a €500m 15 year public sector Obligations Foncieres. The attractive coupon and concession overcame concerns over the bond’s long tenor, which were heightened following further volatility in the rates market.

The European Commission has presented proposals for the treatment of covered bonds which are more favourable than those outlined by the Basel Committee, and may hasten the adoption of soft bullet and conditional pass-through structures.