Covered Bonds

Moody's assigned a provisional A3 rating to the euro-denominated mortgage covered bonds to be issued by Türkiye Vakiflar Bankasi (VakifBank) on Friday.

The secondary market has become irrelevant for pricing covered bonds. Spreads only reflect the level at which the eurosystem is willing to buy at, and not the rest of the market. It is the strongest signal yet of the disruption the European Central Bank's purchasing is causing.

Moody's assigned a provisional A3 rating to the euro-denominated mortgage covered bonds to be issued by Türkiye Vakiflar Bankasi (VakifBank) on Friday.

Kookmin Bank has mandated leads for a roadshow to market the first covered bond issued under the newly established Korean legal framework. The bank, which has issued structured covered bonds in the past, is one of several that are expected to take advantage of the new law. But it had long been expected to be among the first to market, after issuing a consent solicitation in January this year.

Fitch has upgraded the rating of Turkiye Garanti Bankasi (Garanti) after BBVA took a controlling stake in the bank. The rating action is likely to bode well from a credit perspective for the issuer’s forthcoming covered bond.

Poland’s updated law contains measures that make the bonds much more efficient for issuers and considerably more attractive for investors say analysts at Barclays, who expect to see substantial growth in issuance.

The Austrian restructuring law that wiped out subordinated debt guaranteed by the state of Carinthia was overturned this week by the Austrian constitutional court (VfGH). However, it is not expected to change the positions of subordinated and senior creditors much. Covered bonds should remain secure, said research analysts at LBBW and Erste Bank.

The secondary market has become irrelevant for pricing covered bonds. Spreads only reflect the level at which the eurosystem is willing to buy at, and not the rest of the market. It is the strongest signal yet of the disruption the European Central Bank's purchasing is causing.

Covered bond new issue premiums fell this week as six issuers raised a collective €5.5bn in three currencies with total demand of almost €8bn.

The secondary market is no longer a relevant tool for covered bond price discovery, say bankers, as spreads have come only to reflect the level at which the eurosystem will buy bonds rather than regular investors.

The Lion City has been trying to develop a covered bond market for years but progress has been slow. That's mostly been down to the fact that its banks do not have first access to most of the mortgage loans they lend out. That privilege lies with the country’s pension fund, the Central Provident Fund (CPF).

Singapore can finally lay claim to a covered bond market after its largest bank, DBS, this week printed the country’s first deal in the asset class. The build-up was hardly plain sailing, but that did not stop DBS executing a very successful trade that will serve as a benchmark for its peers, writes Rev Hui.