Covered Bonds

Four out of five of this week’s covered bond trades were only just subscribed and, of the 20 issued so far this month, nearly 50% of them scraped through bookbuilding. Even though conditions look increasingly unreceptive to further supply, issuers that still have funding needs would rather move sooner than later as they fear spreads and yields will go higher as a result of the recent glut of supply.

The Cover’s ninth annual awards took place this year in the magnificent settings of Casa Llotja de Mar in Barcelona on Thursday September 10. 766 market participants voted including over 350 investors with at least €400bn in covered bond assets under management. Please take a look at the pictures taken during evening.

Caja Rural de Castilla-La Mancha (CRCLM) completed a series of meetings last week and has mandated leads for its first deal, a six year that is to be launched on Tuesday.

ING in the Netherlands has won the consent of investors to amend terms of 10 covered bonds from a hard to soft bullet maturity. The result comes after a number of changes to the documentation of its larger and more established programme. The alternative €5bn soft bullet programme will only ever be used for placing bonds internally, the issuer confirmed .

The Belgian covered bond issuer has appointed lead managers for a roadshow with a view to issuing a euro benchmark, its second ever.

The Austrian covered bond issuer has completed a series of investor meetings that finished on September 18 and will launch a five year deal on Tuesday.

Credit Mutuel Arkéa issued a covered bond for the first time since June 2013 on Wednesday, but despite its rarity, it was compelled to offer a wide spread given the weak market conditions.

Covered bonds are the only asset class to have provided investors with a positive total return this year according to the independent index provider, Markit. However this positive picture is somewhat counterbalanced by data from e-trading platform, MarketAxess, which shows traded volumes are down sharply.

Deutsche Kreditbank just managed to raise €500m of eight year funding on Tuesday with a public sector pfandbrief. The transaction only just managed to get over the finishing line but in the current ‘dull and shaky’ market conditions, this was good enough.

Four covered bonds have been issued so far this week, but only one deal from Sparebanken Vest Boligkreditt was comfortably oversubscribed. The choice of tenor, deal size and generous spread ensured a solid reception, despite tough market conditions — which Credit Mutuel Arkea will face on Wednesday when it is expected to opens books for another covered bond.

Morgan Stanley has bulked up its FIG DCM team with a new hire from Crédit Agricole CIB.

Bank of Montreal (BMO) returned to the covered bond market for the fourth time this year to issue its third benchmark in euros. At seven years, the tenor was longer than the borrower’s previous two benchmarks, but at €1bn it was considerably smaller even with a wider spread.