Covered Bonds

BBVA priced a well oversubscribed €1.25bn seven year with barely any new issue concession and a long way through the Kingdom of Spain’s spread.

Toronto-Dominion Bank (TD) and National Australia Bank (NAB) raised more than €3bn this week in the US dollar denominated covered bond market, nearly doubling supply seen so far this year.

Berlin Hyp (BHH) issued the first negative yielding fixed rate euro covered bond on Tuesday, days before the European Central Bank lowered the discount rate further into negative territory.

Many other issuers, and particularly those in Germany, likely to follow Berlin Hyp's lead with negative yielding covered bond supply.

National Australia Bank has issued the second dollar-denominated Australian covered bond of the year, and the fourth covered bond in dollars this year.

Van Lanschot Bankiers mandated leads for a roadshow with a view to issuing a euro denominated conditional pass through benchmark.

Eurobank has issued its first covered bond in the private market after recently updating its prospectus. With two other major Greek banks having conducted similar exercises, the road to their rehabilitation in the capital market has become more established, despite rating downgrades.

The first negative yielding covered bond, which was issued on Tuesday by Berlin Hyp, was almost an inevitability. But given the psychological resistance and reputational risk involved in selling such a deal, the outcome was by no means a foregone conclusion. The deal's resounding success should mean more will now follow.

Berlin Hyp issued the first negative yielding covered bond this week, giving investors a sign of things to come as financial institutions prepare for another round of monetary policy stimulus from the European Central Bank.

Berlin Hyp (BHH) issued the first negative yielding fixed rate euro covered bond on Tuesday, days before the European Central Bank is expected to lower the discount rate into even more negative territory.

BBVA returned to the covered bond market for its first deal since November 2015, pricing a well oversubscribed €1.25bn seven year with barely any new issue concession and a long way through the Kingdom of Spain’s spread. The transaction followed one from Toronto Dominion, which on Monday became the first Canadian bank to issue in the US dollar covered bond market this year.

After over a month with no French supply, Caffil and Compagnie de Financement Foncier returned to the primary market on Monday, respectively launching a tap and a new benchmark which both met with a strong reception.