Covered Bonds

Bernd Loder, who left Barclays in May, has reappeared at UniCredit where he will start as a director in the investment grade and CEEMEA bond syndicate on August 3.

Poland’s new covered bond law is expected to come in to effect on January 1, following approval by the senate next week. The law will open up the Polish covered bond market to international investors as well as lifting the ratings of Polish covered bonds.

After announcing its intention to repurchase all of its series 7 and series 8 2017 covered bonds, Northern Rock Asset Management (NRAM) has set the purchase price on the notes. It is hoping to reduce its liabilities and close its covered bond programme following a successful buyback in March.

Commonwealth Bank of Australia printed the second dollar bond of the week from an Aussie issuer on Thursday. Westpac’s success on Tuesday gave bankers the confidence to progress, but the trade was executed with caution.

Northern Rock Asset Management (NRAM) intends to buy back all of its covered bonds due 2017 which are validly tendered, and was due to set the purchase price on Friday afternoon.

Caisse Française de Financement Local struck a defiant note on behalf of the covered bond market in the face of the Greek crisis on Thursday by printing the first euro deal from a European issuer in three weeks.

Caisse Française de Financement Local proved the resilience of the covered bond market on Thursday by printing the first euro deal from a European issuer in three weeks. The defensive three year tenor was exactly what the market needed, according to rival bankers, and paves the way for more short-dated euro issuance.

Westpac’s $800m three year floating rate covered bond, issued on Tuesday, has piqued interest from other covered bond issuers outside Europe, who could be ready to launch deals at short notice.

The Bank of Scotland has issued a consent solicitation requesting a switch from hard bullet to 12 month extendable soft bullet maturities for seven of its benchmark deals.

Piraeus Bank has cancelled its covered bonds which, along with all other Greek covered bonds, are no longer eligible for funding under the European Central Bank’s Emergency Liquidity Assistance facility. The move comes after ECB raised ELA collateral haircuts to a rumoured 45% with a warning that it may cut liquidity off completely two weeks from now.

The proportion of residential mortgages in Spanish Multi-Cédulas (MC) has risen, leading to an improvement in their credit quality, Fitch said on Tuesday.

Markets could be facing a protracted period of uncertainty, as a Greek exit from the euro seems more likely after the “No” vote in Sunday’s Greek referendum. The Eurogroup is expected to hold a summit on Tuesday when it will become clear whether or not there is a political will to do a new deal with Greece. Risk aversion should ultimately favour covered bonds, but borrowers will need to price deals cautiously.