Covered Bonds

Banca Carige may follow the example of Portugal’s Montepio, which on Friday said it would restructure its covered bond programme to a conditional pass-through (CPT), resulting in a three notch upgrade. The Italian bank’s bonds were junked by Fitch on Thursday, and with access to primary markets at risk, it may copy Monte dei Paschi Siena which switched to a CPT last year.

Moody’s has talked up the positive credit aspects of Turkish covered bonds in an in-depth report which it published on Thursday. However the agency says Turkish covered bonds remain susceptible to tail event risks such as the political environment — a point which locals dispute.

Singapore's DBS is looking to expand its covered bond investor base and has now set its sights on an Australian dollar offering.

Norwegian issuer SR Boligkreditt and New Zealand borrower Westpac NZ will both take new euro deals on the road before the end of May, and the UK’s TSB has confirmed covered bonds will form part of its long term funding.

Landesbank Baden-Württemberg has issued the first European covered bond denominated in dollars this year, boding well for further supply from European banks in the currency.

Caja Rural de Castilla-La Mancha this week issued the first Cédulas in more than two months and swept aside concerns that peripheral issuers would need to pay lavish new issue concessions.

Development Bank of Singapore has appointed leads to explore the possibility of issuing its first benchmark in Australian dollars. DBS has yet to issue its first deal in euros, where market liquidity and depth is considered superior to any other currency.

A recent survey of more than 80 investors undertaken by Crédit Agricole research suggests this year’s supply is unlikely to be greatly affected by the cheap funding provided under the European Central Bank’s Targeted Long Term Refinancing Operation. But with year-to-date supply so well advanced, the weekly average stands to halve.

The Spanish bank issued a highly oversubscribed €500m eight year on Wednesday that was priced substantially through the Spanish government at levels considerably tighter than initially indicated, and with little new issue premium. But after setting the price tighter than guidance one major investor was very unhappy.

Natixis Pfandbriefbank has structured a €90m Sharia compliant commercial real estate loan, which is also eligible for Pfandbrief refinancing.

Norwegian issuer SR Boligkreditt and New Zealand issuer Westpac NZ will both take new euro deals on the road before the end of May.

Following a spread tightening in the US dollar covered bond market throughout this year, Landesbank Baden-Württemberg issued the first US dollar German Pfandbrief of 2016 on Wednesday. The Reg S transaction enjoyed a solid reception and bodes well for further dollar supply.