Covered Bonds

RBC hit the market on Thursday with a sterling-denominated three year floating rate note, becoming the third Canadian issuer to do so this year.

The covered bond market saw a five year euro deal from Nationwide on Thursday, which was priced broadly in line with expectations.

Banco Popular Espanol saw strong demand for its six year benchmark deal, with the €1.5bn deal offering investors pick up to the Spanish government curve and a decent new issue premium.

Comfortable oversubscription levels and price tightening were seen in both CBPP3 eligible and non-eligible paper on Wednesday, with Hamburger Sparkasse pricing its first euro benchmark and Norwegian issuer Sparebanken Vest Boligkreditt landing a €500m five year deal.

Belgian issuer KBC returned to the covered bond market for the first time since April last year with a six and a half year soft bullet Pandbrieven. The €1.25bn deal generated the largest book size seen in recent memory in what was described as a ‘phenomenal’ investor response.

UniCredit’s German subsidiary HypoVereinsbank (HVB) landed its biggest benchmark deal in almost five years on Tuesday, with a six year mortgage Pfandbrief.

Sparebanken Sør Boligkreditt has mandated leads for a European investor roadshow in early March, which could result in the issuer’s debut euro benchmark covered bond.

Deutsche Pfandbriefbank was the only issuer in the covered bond primary market on Monday, raising €500m with a six year Pfandbrief.

CIF Euromortgage announced on Friday that its legacy covered bonds had lost eligibility for repo with the ECB. The institution hopes to resolve the issue early in the second quarter, which could limit the market impact of the move, said analysts on Monday.

The €5.5bn of new euro deals issued this week have performed well in the secondary market, with Macquarie’s debut deal described as a ‘blowout’ by one trader.

United Overseas Bank has become the first global issuer to publish its Harmonised Transparency Template (HTT), which is designed to standardise the disclosure of cover pool information, making it easier for investors to analyse covered bond pools across jurisdictions.

Eight issuers brought €5bn of new covered bonds this week, bringing the total of euro benchmarks issued in February to €14.25bn. German issuers formed the bulk of new paper but more Aussie and Swedish issuance, and a Singaporean mandate, is an encouraging sign for the market.