Covered Bonds

Covered bond supply picked up sharply in July as issuers made up for lost time during May and June. Year-to-date supply may have been stronger than at any time in the past three years but with many destabilising events on the horizon the outlook is precarious.

The amended Polish covered bond law is likely to lead to higher ratings, said Fitch on Monday. Polish covered bonds could achieve a maximum of rating uplift of 10 notches compared to two or three at the moment.

DBS managed to surprise much of the market last week when it picked dollars for the first covered bond issue out of Singapore. If the Lion City is serious about establishing a covered bond market, euros need to be the currency of choice.

South Korea’s Kookmin Bank is sounding investors out for an upcoming covered bond that’s likely to hit the market as early as this week.

The first legally enshrined covered bond from Korea is expected this week from Kookmin Bank which has signalled its intention to issue a RegS/144A dollar benchmark. The new Korean deal is a very different proposition to the other recent Asian debut, the first Singaporean covered bond issued by DBS Bank last week.

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.

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.