Covered Bonds

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.

Technical factors have strongly supported the Obbligazioni Bancarie Garantite (OBG) market, but the resignation of former Italian prime minister, Matteo Renzi, from leadership of the ruling Democratic Party (PD) may hurt the market over the next few months.

Landesbank Baden-Württemberg has priced the tightest covered bond of the year and was able to tighten pricing to a greater extent than any other German issuer this year.

Loans backed by energy efficient buildings could be less risky than conventional mortgages, and should receive better regulatory treatment, according to participants at the European Mortgage Federation-European Covered Bond Council’s (EMF-ECBC) stakeholder meeting held in Brussels on Thursday.

Nationwide Building Society this week issued its first euro benchmark covered bond since the UK’s referendum on leaving Europe and managed to find funding that was two years longer and half the spread of its last deal in February 2016. But it was unable to issue a 15 year.

Nationwide sold a €1bn seven year euro benchmark covered bond on Thursday, its first trip to the market this year.

Berlin Hyp issued a well oversubscribed €500m eight year mortgage backed covered bond on Wednesday and attracted exceptional demand from foreign investors, even though the deal was priced tightly.

BNP Paribas Home Loan SFH made a rare foray into the covered bond market on Wednesday, selling a €500m long seven year deal that was priced well through the French government bond curve.