Covered Bonds

Stadshypotek became the second Swedish bank this year to issue a sterling floating rate covered bond, pricing its deal in line with Canadian issuers.

The newly set up Dutch mortgage bank, Solid Mortgages, is planning to introduce the Danish mortgage system to the Netherlands. Following a presentation to be made this September in Barcelona, the first transaction from Solid could emerge early in 2016, if not before.

Crédit Agricole Home Loan SFH issued a €200m tap of a seven year benchmark covered bond on Thursday. The small tap presented minimal execution risk and was priced with little concession to the curve.

Peripheral covered bonds have performed well lately, especially relative to the long end of the French market where selective sellers were reported on Wednesday. But once the covered bond purchase programme (CBPP3) has finished, peripheral markets are likely to be the most vulnerable.

The Bank of Scotland has become the first bank to not get approval to switch some of its covered bonds from a hard to soft bullet repayment. Though it did get approval to switch the majority of deals to a soft bullet, the result suggests investors are finally starting to assert their rights.

At least three Turkish banks have set up covered bond programmes and could theoretically be ready to issue their first benchmarks this autumn. However, even if the political outlook improves, the cost of funding in dollars using established senior unsecured programmes may be difficult to beat.

The universe of Spanish covered bond issuers could be poised to expand after Moody’s assigned a provisional rating to the Cédulas Hipotecarias of Caja Rural de Castilla-La Mancha.

Stadshypotek has opportunistically taken advantage of continued demand for sterling floating rate covered bonds by issuing a benchmark on Monday. The deal was priced in line with the previous two transactions.

Kookmin Bank has abandoned immediate plans to sell the first ever Korean covered bond a few days after announcing the deal, after meeting an investor base depleted by holidays.

The European Covered Bond Council (ECBC) will present its new dual-recourse bond structure to an audience of regulators, central bank heads and other stakeholders in October – a meeting which will be a barometer of official sector appetite for backing the product.

Covered bond supply picked up sharply in July and the outlook for the remainder of the year now looks distinctly brighter.

Bankers hoped that a covered bond would emerge this week after Lower Saxony got a strong response for its deal on Tuesday. But with no hint of a euro benchmark on Wednesday, issuance hopes have been postponed until the week of August 24. The only flow is in the secondary market, and in the absence of sellers, euro system buying is causing spreads to move one way.