Covered Bonds

Australia and New Zealand Bank has mandated leads for a European roadshow in what will be its first covered bond in two years, while Turkey's Yapi Kredi's first covered bond series was assigned a rating by Moody's.

BRFKredit weathered a sharp rise in Bund yields on Thursday to price a €750m 10 year covered bond that was well oversubscribed. More Scandinavian supply is expected next week, particularly after Moody’s rated Stadshypotek’s new Danish cover pool, but investor interest could start shifting to shorter tenors.

Bank of China is gearing up for another milestone as it starts marketing China’s first green covered bond. While the structure of the dual recourse notes is unlikely to appeal to traditional covered bond investors, the trade underpins Beijing’s commitment to lead innovation in socially responsible financing. Lorraine Cushnie reports.

The secondary market was a little weaker on Wednesday, in line with credit sentiment, but overall conditions were supportive and the market is expected to remain receptive to the mini-wave of likely supply as issuers emerge from blackout.

The European Central Bank is “reaching the limits” of its covered bond purchase programme (CBPP3) according ECB board member Ewald Nowotny, but that does not mean it is about to stop buying.

The European Central Bank has reached the limits of its covered bond purchase programme (CBPP3), according to board member Ewald Nowotny. His remarks reflect the difficulty the ECB is having sourcing bonds, but do not mean the programme is about to end.

The recent rise in yields has provided covered bond borrowers from the most expensive jurisdictions like Germany an opportunity to diversify away from the overpopulated 10 year. DG Hyp was the latest issuer to take advantage of this development with its €500m long eight year which was issued on Tuesday.

Bank of China (London) has mandated banks for what is being described as the first green covered bond from a Chinese bank in a transaction that will be backed by climate debt.

NordLB issued a €750m public sector covered bond on Monday which, like the previous German 10 year from Commerzbank, was only just subscribed. The tight initial spread discouraged order inflation and stimulated high quality orders, allowing the borrower to issue more than was initially planned.

Australia and New Zealand Bank has mandated leads for a European roadshow with a view to issuing a euro denominated covered bond or a senior unsecured benchmark, or both. DG Hyp has mandated leads for a long eight year Pfandbrief.

Moody’s has assigned a provisional Baa1 rating to the mortgage backed covered bonds of Yapi ve Kredi Bankasi and the issuer has published its base prospectus, suggesting it could soon be ready to issue.

Raiffeisenlandesbank Niederoesterreich-Wien AG’s public sector backed covered bond programme has been rated Aaa with Moody’s.