Covered Bonds

The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) will present its Energy Efficient Mortgage initiative at the 22nd conference of parties (COP22) climate summit on November 15 in Marrakech.

On the eve of the US election covered bond bankers considered what the election outcome might mean for their market. A clear victory for the Republican nominee, Donald Trump, would be likely to spur risk aversion which could ultimately improve demand for safer assets such as covered bonds from strong core European issuers.

The German Pfandbrief issuing subsidiary of the Dutch bank, ING Diba, is expected to open books for a 10 year mortgage backed deal, its first in three years.

National Australia Bank paid a minimal concession for a relatively large sterling five year, which it sold alongside a seven year senior unsecured benchmark, on Friday.

Commonwealth Bank of Australia drew strong demand for its floating rate five year Australian dollar benchmark covered bond. The fixed rate five year portion managed to get to only half the size of the floating rate piece, while 10 year tranche was clearly more of a struggle.

Bank of China grabbed market attention on Thursday with the inaugural green covered bond from the Mainland. The deal’s unique structure garnered international attention, supporting the country's pursuit of green bond leadership.

Real money sellers were seen in recently issued Italian covered bonds this week, along with some profit-taking at the long end of the French curve, but German Pfandbriefe were well supported and looked cheap relative to bonds issued by German states.

Caja Rural Navarra is planning the first green covered bond of the year. It follows a trio of covered bonds issued by Australian banks and the first transaction to be issued from Nordea in more than a year.

National Australia Bank has mandated leads for a five year sterling floating rate bond, alongside a seven year euro senior unsecured benchmark.

The European Central Bank is set to introduce higher repo haircuts for retained covered bonds with soft bullet and conditional pass through maturities, a move that some believe could weaken secondary market spreads. The central bank is also introducing minimum disclosure requirements for covered bond ratings.

Real money sellers were seen in recently issued Italian covered bonds on Thursday, along with some profit-taking at the long end of the French curve, which is expensive to OATs. But with German Pfandbriefe looking cheap relative to Laender, the bonds look well supported, bankers said.

Bank of China’s highly anticipated green covered bond launched Thursday, with books growing quickly in the first few hours.