Covered Bonds

Belfius Bank has priced the first Belgian covered bond inside a French covered bond and with virtually no new issue concession.

The covered bond market was in good shape on Tuesday but it was in good shape this time last year too. With core covered bond valuations still out of sync with other asset classes, bankers warn that the market has become complacent and another correction is due.

Natixis Pfandbriefbank (NPB) has mandated joint leads for its first publicly distributed Pfandbrief, which will be launched on Wednesday.

Compagnie de Financement Foncier (CFF) enjoyed a strong reception for its fourth covered bond of the year, the seventh 10 year issue in little over two weeks. Despite the surfeit of 10 year supply and meagre spread to OATs, the transaction was smoothly executed.

Unione di Banche Italiane’s (UBI) €1bn 10 year Obbligazioni Bancarie Garantite was priced tighter than UniCredit’s €1bn 10 year and well through BTPs, though it relied more heavily on domestic buyers.

Compagnie de Financement Foncier has mandated leads for the first French covered bond since mid-June, the bank’s fourth this year and the sixth 10 year in two weeks.

The first week of September is typically a busy week in covered bonds and its likely next week will not disappoint.

Raiffeisenlandesbank Oberösterreich has mandated joint leads for its first benchmark euro covered bond and the Bank of Queensland has hired leads to explore options for a potential structure.

Covered bond investors believe new issue premiums will probably rise in the near future leading to a repricing of the market. But with buyers anxious to put their glut of cash to work in almost anything, the prospective move is likely to prove moderate.

DNB Boligkreditt issued a larger than average euro benchmark 10 year covered bond at a spread that was arguably flat to its curve this week, showing solid demand for non-Eurozone deals that still offer a substantial pickup to core markets.

After a strong start to this year some bankers are beginning to question whether the volumes over the remainder of the year are too optimistic.

Covered bond investors believe new issue premiums will probably rise in the near future leading to a repricing of the market. But with buyers anxious to put their glut of cash to work in almost anything, the prospective move is likely to prove moderate.