Covered Bonds

Banco Sabadell attracted exceptionally strong demand for its second covered bond of the year. Higher-rated Cédulas have rarely offered a spread over Spain since 2011, but this deal did, which made all the difference.

Skandinaviska Enskilda Banken (SEB) issued a €1bn seven year Swedish covered bond on Monday and attracted enough interest to tighten pricing, something that few issuers were able to do recently. However, even with double the concession DNB paid, the Swedish borrower attracted much less demand than the Norwegian one. SEB’s curve has been marked 2-3bp wider following the deal.

TSB Bank is in the market with Duncan 2015-1, its first UK prime RMBS which is a securitization of legacy assets inherited from Lloyds Bank. Meanwhile Belfius will soon be ready to move ahead with Penates 5 which has a special interest rate cap that replaces the swap and reduces rating agency induced counterparty risk.

Primary covered bond activity is expected to moderate next week with anywhere between four and eight deals possible, following 10 this week. Though spreads are wider now than before the covered bond purchase programme (CBPP3) was announced, investors are not taking advantage of the bargains on offer because liquidity is so poor.

Covered bonds worth almost €7bn were issued this week but, by virtue of its size, oversubscription ratio and breadth of demand, Nationwide Building Society’s €1bn deal stood out.

Covered bonds issued this week from banks in Italy and Portugal were a roaring success from the sellers’ point of view. But none could have been done without the European Central Bank’s help.

Wells Fargo got the week's financial institutions bond market off to a strong start with a large seven year deal giving syndicates hope that others would follow in euros this week. They were disappointed.

The London branch of the Japanese firm has put two bankers ‘at risk,’ one of whom had been actively involved in emerging markets, covered bonds and SSA syndicate.

A senior FIG syndicate banker has quit BNP Paribas to move to Danske Bank in Copenhagen.

The European Commission (EC) has published a report in which it agrees with the recommendations of the European Banking Authority (EBA) that the preferential risk weight of qualifying covered bonds is appropriate. It also opens up the possibility of extending preferential treatment to dual recourse bonds backed by SME collateral, or European Secured Notes.

The London branch of the Japanese firm has put two bankers ‘at risk,’ one of whom had been actively involved in emerging markets, covered bonds and SSA syndicate.

A senior FIG syndicate banker has quit BNP Paribas to move to Danske Bank in Copenhagen.