Covered Bonds

Swedbank was set to issue a €1.25bn five year covered bond on Wednesday. The deal attracted more investors than any other covered bond this year, and a larger volume of orders. The new issue concession was small, but the deal’s success was driven by a yield nearly 0.5% more than OBLs

It is no coincidence that Tuesday’s €1bn covered bond from BPCE attracted more investors for a French seven year deal than at any time in the last year. The European Central Bank has started to scale back its purchases.

It is no coincidence that Tuesday’s €1bn covered bond from BPCE attracted more investors for a French seven year deal than at any time in the last year. The European Central Bank has started to scale back its purchases. The issuer also made

European Union Commissioner Jonathan Hill embraced price differentiation and product diversity in covered bonds on Monday. The speech was widely welcomed by practitioners who fear that the ambitious approach to harmonisation advocated by the European Central Bank would be disruptive, unworkable and unnecessary.

BPCE issued a €1bn seven year mortgage-backed covered bond attracting an exceptional level of subscription from a broad range of real money investors. The transaction, along with earlier deals from AIB and CaixaBank, shows that the seven year tenor is now firmly back in vogue, offering the right trade-off between duration and yield.

Abbey National's €1bn five year issued Monday was comfortably oversubscribed but exhibited some price sensitivity.

Caixabank has become the fourth Spanish bank to tap the covered bond market this year with its largest Cédulas in five years. That four borrowers have launched similar sized deals of around €1.5bn so far this year suggests volatile market conditions are causing banks to frontload their funding.

Volatility has pushed FIG senior supply to its lowest January total since 2008, but a resilient covered bond market profited from the gloom, with issuance at its strongest since 2012.

Hamburger Sparkasse AG (Haspa) and Hypo Tirol Bank have respectively mandated leads for a roadshow and an investor call update.

Kookmin Bank issued a $500m five year on Thursday, attracting a comfortably oversubscribed and well distributed book for its second legislative deal, which was priced at the same spread as the issuer’s first, despite a challenging market environment.

The European Central Bank has said efforts to raise minimum standards in the covered bond market should be ambitious, and it sees considerable benefits in harmonisation. The ECB was responding the European Commission’s proposals for harmonisation of the covered bond market.

Principality Building Society priced its Friary No.3 prime UK RMBS deal, landing £475m in what one banker called a ‘tricky’ market. As with sterling covered bonds, the RMBS primary market also seems to be pricing at successively wider levels.