Covered Bonds

Caisse Francaise De Financement Local (Caffil) did well to raise €1bn for its fifth benchmark of the year. And by not squeezing the last basis point it managed to get the first properly oversubscribed deal of its last three.

DNB Boligkreditt issued its first euro-denominated deal of the year which, by virtue of not being eligible for CBPP3, was priced attractively and drew a deep pool of demand from broad range of investors.

Caisse Francaise De Financement Local (Caffil) has mandated leads for seven year covered bond, its fifth euro benchmark of the year. The announcement caused dealers to mark French covered bonds a little wider and suggested that, while market conditions have improved from last week, they are still a bit shaky.

Bank of Ireland returned to the euro covered bond market for the third time this year to raise €750m on a comfortably oversubscribed book. Though cheap by historical standards, the hefty new issue premium left some unconvinced about the market outlook.

Nordea Finland returned to the covered bond market on Monday to issue a €1.25bn seven year. In contrast to other recent deals, the transaction attracted solid demand of over €2bn from a wide range of investors and sets the stage for follow-on issuance.

The primary market is expected to pick up next week as a number of issuers will have finished roadshows and core issuers, possibly including some Nordic names, will return. Though dealer inventories are still high, they are falling thanks to improved central bank purchases which have helped to stabilise spreads.

Bank of Scotland is planning to make its return, after four years of absence, to the public UK RMBS market with a deal denominated in three currencies. Its parent company, Lloyds, has issued four covered bonds this year in sterling and euros.

SumitG bears some striking improvements to Figsco, a similarly structured triple recourse deal that never made it to the market. These include a simpler guarantee, better transparency, cleaner collateral and more of it, as well as more frequent third party checks. But ultimately investors may only need to take a view on its recourse to Sumitomo Mitsui Trust Bank’s €320bn balance sheet.

Royal Bank of Canada issued the first dollar denominated Canadian deal in three months at the widest spread this year, while Münchener Hypothekenbank supplied the only euro deal of the week.

Novo Banco and Bank of Cyprus have both restructured their existing hard bullet covered bond programmes into conditional pass through programmes.

Goldman Sachs and Sumitomo Mitsui Trust Bank are set to start marketing SumitG, a bond backed by a portfolio of RMBS, but secured by claims against both institutions. Goldman will be hoping to avoid the fate of last year's Figsco issue, a note with a similar structure which never made it to market. Bill Thornhill reports.

Moody's has assigned a provisional A3 rating to the conditional pass-through covered bonds of the good bank carved out of Banco Espirito Santo. A second rating could follow, and may potentially presage a deal.