Covered Bonds

Many emerging markets and developing countries are in the process of setting up, or have set up covered bond regimes, said Loic Chiquer, chief technical specialist at the World Bank. Speaking at the European Covered Bond Council plenary session on Wednesday, Chiquer painted a bullish picture for the continued globalisation of covered bonds.

Many emerging markets and developing countries are in the process of setting up, or have set up covered bond regimes, said Loic Chiquer, chief technical specialist at the World Bank. Speaking at the European Covered Bond Council plenary session on Wednesday, Chiquer painted a bullish picture for the continued globalisation of covered bonds.

Fear not, the European Central Bank may be squeezing investors out of the market but the day will come when it eventually exits. And when it does, spreads will widen and buyers will be back, said bankers at the Euromoney Covered Bond Congress in Barcelona on Thursday - where 1,115 delegates registered their attendance.

UniCredit Italy became on Monday the first Italian bank to break through the mid-swaps barrier with a covered bond, but it needed to employ its lead managers’ balance sheets to do it.

Hypo Tirol has named leads for a new benchmark euro-denominated mortgage covered bond. Austrian mortgage-backed bond issuance appears to be gathering momentum after a long Heta hangover. However, rival bankers said that lingering concerns about the level of exposure the mortgage banks have to Heta may hamper the deal.

Covered bond issuers have front loaded this week, printing €5.5bn in just two days via seven deals.

The Spanish Cédulas outlook is set to improve, not just because the economy is experiencing one of the strongest growth rates in Europe, but also because legislative proposals will bring the market into line with best practice. However, there is still no consensus on how the proposals will be implemented, said panellists at the European Covered Bond Council’s plenary session in Barcelona on Wednesday.

September 2016 is touted as the earliest possible date for the wind down of both quantitative easing and the Covered Bond Purchase Programme (CBPP3). But with little visibility beyond these bare details, bankers at the European Covered Bond Council Plenary Meeting in Barcelona were divided as to what impact, if any, the wind down will have on the covered bond market.

Cariparma Crédit Agricole printed a €1bn June 2023 mortgage-backed bond on Tuesday. The healthy new issue premium offered by the issuer suggests investors are demanding more of a premium following the glut of supply recently.

Hypo Tirol has named leads for a new benchmark euro-denominated mortgage covered bond. Austrian mortgage-backed bond issuance appears to gathering momentum after a long Heta hangover. However, rival bankers say that lingering concerns about the level of exposure the mortgage banks have to Heta may hamper the deal.

SR-Boligkreditt has mandated leads for a series of investor meetings with a view to issuing its first deal.

Valuations of CBPP3 eligible covered bonds have overshot fundamentals says Pimco’s Kristion Mierau. While his portfolio has grown this year, his firm is navigating away from price dislocations caused by the European Central Bank’s purchase programme.