Covered Bonds

Just four months after its inaugural covered bond, Singaporean lender DBS is once again looking to venture into the market, mandating four banks to run a series of investor meetings. But rather than targeting the same investor base, the issuer has set its sights on a sterling-denominated trade.

Initial price thoughts have been indicated for TSB’s first UK prime RMBS deal, with the transaction offering a pick up on both the euro and sterling tranches for investors, compared to more established issuers.

Deutsche Bank is set to go on the road and market its first Cédulas Hipotecarias, which was rated Aa2 with Moody’s on Monday.

Following its recent roadshow, Deutsche Apotheker- und Ärztebank eG has mandated leads for a €500m no grow Pfandbrief.

Mediobanca issued a smaller than usual deal on Tuesday enabling a higher level of oversubscription than many recent Italian covered bonds with a concession that was towards the lower end of the range.

Yorkshire Building Society offered a chunky premium for its €500m of seven year covered bond on Tuesday. With only a modest oversubscription, it was not able to tighten pricing.

Aegon Bank, the subsidiary of the Dutch Globally Systemically Important Insurer Aegon, has set up a €5bn conditional pass through (CPT) covered bond programme that is registered with the Dutch central bank. A triple A-rated transaction is expected this year.

Westpac has mandated leads and opened books for a dollar benchmark covered bond, to be priced on Monday. And in euros, Yorkshire Building Society (YBS) has mandated leads for a €500m no-grow seven year benchmark, to be launched on Tuesday.

A poor third quarter for Commerzbank’s investment banking division and the announced retirement of its chief executive has done little to spoil the bank’s overall sense of momentum, as it posted better profits than had been widely expected and revealed it would pay its first dividend in eight years.

The covered bond primary market is likely to experience an increase in activity next week, with a handful of deals expected. Though conditions are broadly constructive and have improved from two weeks ago, the secondary market still looks precarious suggesting issuers that move early will have an advantage.

Three issuers launched covered bond benchmarks in euros this week, down from nine in the previous week, as borrowers anticipated an improvement in market conditions and lower new issue concessions.

Fitch will soon release an exposure draft focused on its treatment of foreign exchange (FX) risk in covered bond programmes with open FX positions, along with a number of other proposals that seem positive for covered bond ratings.