Covered Bonds

Westpac New Zealand’s €750m five year this week attracted the largest order book and was priced at the tightest ever spread for a New Zealand covered bond. Bank of New Zealand is set to follow.

Bank of Montreal (BMO) issued its debut dollar legislative covered bond on Thursday, achieving the tightest spread of any covered bond issued this year in the currency.

Fitch may assign a rating uplift to Italian SME covered bonds, or Titolo Obbligazionari Collateralizzati. The upbeat rating assessment follows a survey conducted by analysts at Société Générale which suggests more than 40% of covered bond investors would consider buying such deals.

Bank of New Zealand has mandated leads for the second Kiwi covered bond of the week. At the same time Suncorp Metway announced plans to issue an Australian dollar benchmark and UBI Banca has issued a tap.

The Bank of Montreal has priced its first covered bond in dollars since Canadian covered bond legislation was implemented in June 2012. Having been out the market for so long, the deal benefitted from “scarcity value” and was priced with no new issue premium.

Eurozone banks could be forced to raise up to €135bn of extra capital to offset planned changes to the treatment of sovereign debt holdings, Fitch said on Wednesday.

Bank of Montreal (BMO) has opened books for its third covered bond benchmark of the year but its first in dollars in four years. The deal follows a string of successful transactions in the US currency issued by BMO’s Canadian peers at progressively tighter spreads and in larger sizes.

Nykredit issued the first contractually bail-inable senior debt on Monday, in a well-received deal that could set the tone for the growth of the asset class in Europe.

Competition is becoming much fiercer in the Turkish banking sector. After years of rampant loan growth in many markets, banks will have to fight much harder to find new customers and bigger margins in the future.

Westpac New Zealand issued a comfortably oversubscribed €750m five year covered bond on Tuesday and priced at the tightest spread ever for a New Zealand covered bond. At the same time, NordLB’s Luxembourg subsidiary issued a less well subscribed €500m seven year.

BRFkredit, the Danish mortgage bank, has mandated leads for a roadshow.

Delta Lloyd Bank’s €500m Dutch RMBS deal was priced on Tuesday and benefitted from strong technical support as investors scramble for paper. The swapless bonds also feature more than usual credit enhancement as well as low risk NHG-guaranteed collateral that may soon become scarce.