Covered Bonds

The Luxembourg subsidiary of NordLB will issue its longest covered bond yet, and one that should offer a double digit return, though covered bonds issued by German banks invariably price and trade well through mid-swaps.

The New Zealand subsidiary of Westpac has mandated leads for the second five year euro denominated benchmark of the year from a New Zealand bank. The deal follows an investor roadshow that was completed last week

Several borrowers are expected to launch covered bonds next week, and though some bankers have their doubts that the market will be as busy as this week, others say that superb market conditions will tempt opportunistic borrowers to move ahead with short notice.

Banca Popolare di Milano and Banco Sabadell issued covered bonds which, despite their negligible new issue concessions, met with exceptionally strong demand.

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.”