Covered Bonds

After a slow start to the week, a torrent of covered bonds was priced on Wednesday and Thursday, as issuers sought to move quickly in case the market succumbs to one of many potential political risks it faces this month.

Dr. Louis Hagen will succeed Jan Bettink as president of the Association of German Pfandbrief Banks (vdp).

The German and Spanish issuers provided the main focus in the FIG market on Thursday, respectively pricing a €500m 10 year and a €1bn eight year, which were both easily sold.

Banco de Sabadell will push out its maturity curve with an eight year deal after mandating leads on Wednesday.

Banca Popolare di Milano opened books for the first Obbligazioni Bancarie Garantite in 10 weeks. Despite offering a negligible new issue concession, the deal met with exceptionally strong demand.

Four covered bond borrowers priced euro benchmarks on Wednesday with spreads that initially ranged from 3bp to 55bp. By virtue of its large order book and relatively tight pricing, SR Boligkreditt’s (SRbol) €750m September 2021 was probably the most emblematic of investors’ zeal to buy.

Four covered bond borrowers are expected to price deals on Wednesday and take advantage of strong market conditions before a series of potentially market moving events later in June.

WL Bank was unable to sell a €250m nine year deal on Monday. Despite the fact it offered nearly 40bp over Bunds and a modest premium against its own curve, rival bankers described it as “stupidly expensive.”

German and Austrian covered bond issuers are expected to benefit if the Austrian government’s most recent offer for partial repayment of Heta Asset Resolution’s senior and subordinated debt is accepted by its creditors. Despite the more positive outlook, the loss of trust may take years to repair and for the time being Austrian covered bonds are unloved.

DBS Bank in Singapore this week issued its first deal in Australian dollars, the first covered bond from an Asian lender and the first benchmark sized Kangaroo covered bond of the year.

Delta Lloyd has announced a prime RMBS that is fully backed by Nationale Hypotheek Garantie (NHG) mortgage loans. Although these loans are less risky, the supply of them may fall due to new European regulations, said analysts at Rabobank.

TwentyFour Asset Management’s listed closed-ended UK Mortgages Limited fund muscled in on the UK RMBS market on Wednesday with a debut securitization of buy-to-let mortgages.