Covered Bonds

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.

Macquarie issued its inaugural covered bond on Thursday, meeting a strong reception with the five year €500m paper twice subscribed by investors. Westpac has also opened books on a $1.35bn deal, as Fitch said it expects Australian covered bond issuance to rise this year.

Helaba brought the biggest Pfandbrief since 2011 on Tuesday, pulling in €1.25bn with a long four year deal. It was the first ever euro benchmark covered bond issued with a zero percent coupon, but given the persistent low interest rate environment it is unlikely to be the last, with some bankers alarmed at the prospect of negative yielding covered bonds.

Macquarie’s inaugural covered bond was met with a strong reception on Thursday, with the five year €500m paper twice subscribed by investors. Westpac has also opened books on a dollar deal, as Fitch says to expect Aussie covered bond issuance to rise this year.

DG Hyp became the fifth German issuer to test the primary market this week, bringing a €500m long six year Pfandbrief that was more than twice subscribed.

HSH Nordbank issued its first public sector Pfandbrief in almost two years on Wednesday, offering a relatively wide spread compared to other German issuers.

Macquarie Bank has mandated leads for a new euro-denominated Australian covered bond, which is expected to launch on Thursday.

The covered bond market could see the second Singaporean deal soon, with United Overseas Bank (UOB) mandating leads for a series of European investor meetings that could result in its first deal.

Helaba brought the biggest Pfandbrief since 2011 on Tuesday, a €1.25bn long four year deal. Other bankers were alarmed by zero percent coupon and slim yield on offer, but investors were clearly less concerned, with the paper well oversubscribed.