Covered Bonds

Muenchener Hypothekenbank has mandated leads for a three year dollar-denominated Reg S mortgage-backed covered bond, the second from a German issuer this year.

Only one or two transactions are expected in the first half of this week but with many issuers in blackout supply prospects are set to remain dim exacerbating a technical squeeze.

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Canadian Imperial Bank of Commerce has tapped its three year sterling covered bond at a tighter spread than it was initially priced and in a considerably larger size than the minimum it had planned.

The number of active covered bond borrowers looks set to hit a new record after Moody’s assigned its top rating to the hard bullet mortgage covered bond programme of Austria’s Raiffeisenlandesbank Oberoesterreich (RFLBOB).

Obvion’s €1bn Purple Storm Dutch RMBS deal, which sold the entire capital stack, shows that despite the growth of whole loan portfolio sales, there is still interest in using securitization as a capital relief tool.

Covered bond secondary market volumes saw a small improvement on Thursday, but with limited supply and continued central bank buying, the market is set to become more technically squeezed over summer.

Commerzbank issued the first euro covered bond since June 15 on Monday, and though it was a clear success, no other issuer ventured to follow.

Covered bonds saw a relative improvement in flows on Thursday, but with a limited supply outlook and continued central bank buying, a technical squeeze had begun to take hold. CIF Euromortgage performed well after regaining preferential regulatory treatment.

European ABS investors are set to get a rare slice of French RMBS, with GE Money Bank in France hitting the road with €2bn of French residential mortgages.

Asset encumbrance caused by covered bond issuance has increased over the past year, according to the European Banking Authority. However, there has not been much change in the overall level.

The ratings of non-UK covered bonds that are partly backed with UK assets will not be affected by the downgrade of the UK from AA+ to AA, said Fitch on Wednesday. However, if the UK does not enter the European Economic Area (EEA) some Pfandbriefe could be affected according to an earlier report from Moody’s.