Covered Bonds

SR Boligkreditt hit the market with the second Norwegian covered bond of the week on Friday, with a five year €500m no-grow deal that offered a premium to Thursday’s successful five year deal from DNB.

The Estonian government is working on a draft law that will allow local banks to issue covered bonds, said the Ministry of Finance.

The Dutch government has urged the European Commission to address the “unbalanced” regulatory treatment of securitization compared to covered bonds, complaining of “disproportionate” incentives to invest in covered bonds versus ABS.

Virgin Money has mandated leads for a new UK prime RMBS deal from its established Gosforth shelf, which will be issued in multiple currencies and will look to attract US investors with a 144A registration.

After surpassing several milestones in 2015, the covered bond market should be set for another record-breaking year in 2016. Bill Thornhill talks to Société Générale CIB’s head of covered bond origination, Ralf Grossmann, and the bank’s senior covered bond research analyst, Cristina Costa, about their predictions and recommendations for the forthcoming year.

Covered bond new issue spreads are wider today than when the European Central Bank began buying for its third purchase programme a year ago. Bill Thornhill examines the causes for this anomaly and considers how the market will look in 2016.

Lloyds issued the first sterling covered bond of the year and was quickly followed by two overseas issuers who priced deals at successively wider levels.

Borrowers who issued covered bonds this week that are eligible for the European Central Bank’s purchase programme (CBPP3) did not receive such a strong reception as those whose bonds were not eligible.

Eleven covered bonds were priced in the first week of 2016 despite the onset of European holidays and US non-farm payroll data.

After surpassing several milestones in 2015, the covered bond market should be set for another record-breaking year in 2016. Bill Thornhill talks to Société Générale CIB’s head of covered bond origination, Ralf Grossmann, and the bank’s senior covered bond research analyst, Cristina Costa, about their predictions and recommendations for the forthcoming year.

Bank of Nova Scotia issued the third sterling three year floating rate note of the week, paying a slightly wider spread than Nordea and Lloyds. While this led to questions about the depth of the sterling market, bankers said the differential was justified and noted that the final funding outcome was attractive compared to alternative markets.

ABN Amro was set to price a benchmark €1.25bn 10 year euro covered bond on Thursday. The long tenor, a busy market and volatile conditions meant it was not an easy trade to sell. But with the borrower taking a pragmatic approach by paying a generous concession, the final outcome was positive.