Covered Bonds

Romania’s credit positive covered bond legislation has been undermined by a new mortgage law that allows borrowers to default and retroactively removes a lender's ability to take recourse against a defaulted borrower.

Westpac has confirmed it received the necessary quorum and consent to change the terms of a US dollar benchmark after it was unable to achieve the necessary quorum on the first attempt.

The European Covered Bond Council (ECBC) has appointed DBS's Colin Chen as the chairman of a new global working group for 2016-2019.

The Eurosystem has had the luxury of being able to maintain its covered bond purchasing rate thanks to an active primary market. But with supply set to slow over the second half of April and dealers’ inventories light, the European Central Bank will be obliged to step up purchases in the secondary market, or slow down the overall rate of buying.

The primary covered bond market was active this week with as many as seven issuers raising more than €6bn, including the longest deal in over a year and a debut borrower in euros.

Proposed ‘Basel IV’ regulations, which will impose a capital floor that banks must apply to their internal risk models, is counterintuitive and severely challenges the logical link between risk and capital requirements, delegates heard at the European Covered Bond Council’s plenary meeting in Copenhagen on April 23.

Leeds Building Society quickly built a well oversubscribed and broadly distributed transaction for its first euro benchmark covered bond, launched on Thursday. The short tenor, which has largely been displaced by TLTRO funding, provided a strong catalyst for its success.

The Financial Conduct Authority’s study of competition in investment banking has found no need for action over competition in the primary debt markets. However, the regulator said it will closely monitor the use of reciprocity to award mandates, particularly in covered bonds.

Nationwide issued the joint largest sterling covered bond of 2016 on Wednesday, attracting the largest order book of any sterling deal in the year. Leeds said it planned to issue its first euro deal at the short end of the curve on Thursday after finishing its four day, two team roadshow earlier this week.

Eika Boligkreditt and Deutsche Pfandbriefbank (PBB) successfully issued €500m covered bonds respectively in the seven and 19 year tenors on Wednesday. The German transaction was the longest seen for over a year and pays testimony to investors’ appetite for duration.

An improvement in market conditions since Nationale-Nederlanden Bank (NN Bank) was last in the RMBS market didn’t help initial spreads on its privately placed €500m deal come any tighter. As the regulatory treatment of ABS has failed to make progress, the issuer could be tempted to follow its Dutch peers and set up a conditional pass through (CPT) covered bond programme.

The Norwegian lender has mandated leads for the seventh Norwegian euro benchmark to be issued this year and the fourth with a seven year maturity.