Covered Bonds

The covered bond programmes of six Turkish banks were put on review for downgrade by Moody’s on Thursday just as the only mortgage backed deal issued by Vakifbank widened further. Despite that, Batuhan Tufan, head of financial institutions at Garanti Bank, says Turkish banks are well capitalised and until now the economy had been in a strong position.

Commonwealth Bank of Australia issued a €1.25bn 10 year on Wednesday, attracting the highest level of oversubscription for any Australian issuer in euros in more than three years.

The floodgates to negative yielding covered bonds have taken four months to properly open, but with two such deals seen in less than a week, many should now follow.

The parent company of Caffil, the French public sector covered bond issuer, has finalised the first loan under its newly established export credit finance business. The Cover spoke to Caffil’s head of treasury and financial markets, Sami Gotrane, about the issuer’s prospective plans in the export finance business.

WL Bank enjoyed strong demand for its €250m 10 year covered bond tap on Tuesday, an increase that managed to provide investors with a positive yield. But with spreads in the secondary market tightening again on no flow, the positive yielding universe was quickly disappearing.

The one and only euro benchmark Turkish covered bond issued by Vakifbank widened slightly on Monday but then more sharply on Wednesday following the attempted coup over the weekend. Covered bond investors said the episode would provide a good test case for emerging market covered bonds.

Canadian Imperial Bank of Commerce priced the first negative yielding non Eurozone covered bond and attracted a comfortably oversubscribed order book with a tiny new issue concession.

CaixaBank has announced a reorganization of its debt capital markets team, which will now be led by Ainhoa Landa — the former head of structured bonds syndicate. Landa will report to Ignacio Moliner, head of capital markets and corporate finance.

With an oversubscription ratio of more than five times, Deutsche Hypo’s tap, issued on Friday, should put to rest qualms that have hindered supply of negative yielding covered bonds since Berlin Hyp’s ground breaking deal four months ago.

Piraeus Bank has become the third of the four largest Greek banks to update its covered bond programme in what is likely to be a prelude to issuance.

The covered bond primary market was kept busy this week as a trio of German banks supplied the market in euros and dollars across a range of maturities.

The conditional pass through (CPT) covered bonds issued by Aegon Bank should trade tighter than other Dutch CPTs, say analysts at Commerzbank research. Bankers say all CPT Dutch bonds should perform, as they are one of a few in core Europe that still offer a positive spread to mid-swaps.