Covered Bonds

The European Central Bank's covered bond purchase programme is once again regularly taking half or more of primary issuance, with negative repercussions. It should step back.

Deals issued on Tuesday from Westpac New Zealand and Spain's CRCLM failed to gain much traction despite attractive pricing. Another from Bawag, its first in three years was more comfortably oversubscribed.

Swedbank defied a tricky market on Tuesday to raise €1.25bn in five year covered bonds, in a deal described by a rival banker as “outstanding”.

ABN Amro surprised the covered bond market on Tuesday with a deal that was both punchy in size, tenor and coupon. The 15 year transaction illustrated strong demand for duration and confounded the view that the market is oversupplied.

The Swedish bank has mandated leads for a five year benchmark that is expected to be launched on Tuesday. This will be its second deal in euros this year and its fourth overall.

Norwegian lender, SR-Boligkreditt issued its first euro covered bond on Monday, a €500m five year. The transaction offered a tempting spread pick-up to where Sparebank Vest issued an identical transaction last week thereby ensuring a strong reception, despite challenging market conditions.

Westpac's New Zealand subsidiary has appointed leads for its first euro covered bond, and the second from New Zealand, of the year. The transaction is expected to price on Tuesday.

A numerical breakdown of The Cover's 2015 awards survey by each voting group.

Several covered bond issuers need to get up to speed with their funding plans before the start of October, though investor appetite is anaemic and set to wane further. And, with the probability of a Fed’ rate hike this year being underestimated by the market, a spike in rates volatility is expected.

The European Covered Bond Council (ECBC) said on Thursday that borrowers holding the covered bond Label had agreed to report on a common basis from next year using its Harmonised Transparency Template (HTT). HTT will enable investors to compare different covered bonds on a like-for-like basis using the Covered Bond Label Platform, and comes in response to the European Commission’s Capital Markets Union initiative.

Covered bond issuers failed to take heed of poor market conditions and, just like lemmings, followed one another with poorly performing deals this week.

Kuxtabank this week issued the first Spanish covered bond backed by loans with an environmental, social and governance remit, and the first peripheral 10 year since March.