Covered Bonds

Stadshypotek, the mortgage subsidiary of Svenska Handelsbanken, returned to the market with its first euro denominated covered bond since November 2014. The issuer increased the transaction size and tightened the spread, sending strong signal of confidence to other borrowers considering launching deals before the end of the year.

Deutsche Bank’s subsidiary in Spain successfully issued its first publicly syndicated Cédulas Hipotecarias on Tuesday. The €1bn five year, which attracted a comfortably oversubscribed book, sets a strong foundation for further benchmark supply expected over the next two years.

Deutsche Bank will open books for a five year Cédulas Hipotecarias on Tuesday following last week’s roadshow.

OP Mortgage Bank issued a well oversubscribed €1.25bn five year covered bond on Monday, despite offering a concession smaller than that of many recent core covered bonds.

Moody’s has withdrawn the Aa3 covered bond ratings of KA Finanz and downgraded those of KA New to Baa2. KA Finanz, which owns the euro benchmarks, has confirmed it will maintain a consistent overcollateralisation ratio and is seeking another rating from Standard & Poor’s. Despite this uncertainty, analysts expect the bonds owned by KA Finanz to outperform its peers.

The credit ratings of newcomer Scope will be treated on a par with the other four main agencies. This means its top triple-A rating assessment will count as credit quality step one, as opposed to step two, a category that would have caused investors to apply a prohibitive risk weight equivalent to a single-A rated bond from the other rating agencies. Karlo Fuchs, head of covered bonds at Scope Ratings in Germany, talks to The Cover about this important development.

The Dutch bank has mandated leads to roadshow its inaugural conditional pass-through covered bond.

Korea Housing Finance Corp (KHFC) has returned to the offshore debt market with its first covered bond in more than two years, with strong demand allowing the issuer to achieve its pricing and diversification aims.

National Australia Bank printed a €750m seven year covered bond on Monday. But the deal didn’t fly off the shelf, even though it offered a substantial premium to other Australian covered bonds. The lack of European Central Bank repo eligibility and slackening demand in the seven year area was blamed.

Tightly priced and low yielding Pfandbriefe issued this week by HSH Nordbank and Deutsche Hypo received less demand than usual, with HSH failing to attract enough attention to cover its deal.

BBVA issued a €1.25bn five year covered bond on Tuesday that attracted an order book unequaled in size in the Cédulas market since July.

The Romanian mortgage market is set for growth after local authorities amended its previously unusable covered bond law to bring it into line with the best standards in western Europe.