Covered Bonds

Danske issued in a larger size and attracted more orders for its covered bond than Deutsche Bank did for its deal. The outcome was surprising given Deutsche’s rarity and higher quality collateral. But in any case the German issuer did well given that it could have done the deal without any support from the Eurosystem.

Westpac has announced a consent solicitation asking investors to agree to a switch in the maturity structure of six covered bonds from hard to soft bullet with a 12 month extension.

The covered bond primary market began slowly this week with just one quickly syndicated €500m German benchmark from Deutsche Apotheker- und Ärztebank (Dapo) emerging. Despite its measly coupon the deal offered a hefty pick up to Germany. Covered bond supply is expected to improve in the week ahead.

The covered bond purchase programme is scheduled to end in March 2017. However, as maturing bonds will be reinvested, the European Central Bank could end up buying up to €40bn per year just to keep its portfolio from shrinking, according to new analysis from Crédit Agricole CIB research.

The European covered bond market has had to adapt to the distorting influence of the European Central Bank’s Covered Bond Purchase Programme (CBPP3), an unsettled outlook for global credit and ever lower yields. But relative value has improved with widening spreads, and real money investors are starting to return.

The European covered bond market has had to adapt to the distorting influence of the European Central Bank’s Covered Bond Purchase Programme (CBPP3), an unsettled outlook for global credit and ever lower yields. But relative value has improved with widening spreads, and real money investors that once deserted the asset class are starting to return. The combination of slightly less central bank buying, higher net issuance and slightly fewer real money investors, for eurozone bonds in particular, is hardly bullish. But buyers are now ready to jump back into covered bonds, as they see value.

Torsten Elling will not be returning to Barclays, having been on paternity leave since June last year, The Cover understands.

The preferential regulatory treatment that UK covered bonds currently enjoy could deteriorate if the United Kingdom votes to leave the European Union in this June’s referendum, said Allen & Overy. Deals issued this week suggest the market has already priced Brexit risk in.

Royal Bank of Canada demonstrated the health of the primary covered bond market on Friday when it priced a €1.5bn deal that offered a minimal new issue concession. And with only one week to go before the European Central Bank’s policy meeting, other issuers will be keen to join apoBank, which mandated leads for a deal.

Torsten Elling will not be returning to Barclays, having been on paternity leave since June last year, GlobalCapital understands.

Covered bonds, the ‘all weather asset class’, have been a haven of stability for issuers amid volatility in credit markets in recent weeks. But the repricing in the market, driving spreads out to attractive pre-CBPP3 levels, has also drawn back investors who many feared had left the market.

Covered bonds, the ‘all weather asset class’, have been a haven of stability for issuers amid volatility in credit markets in recent weeks. But the repricing in the market, driving spreads out to attractive pre-CBPP3 levels, has also drawn back investors who many feared had left the market.