Covered Bonds

Unión de Créditos Inmobiliarios’ has issued the first Spanish RMBS since 2007. Meanwhile, ING made its first appearance in two years with an RMBS backed by better quality collateral than many covered bonds, and with a much fatter spread.

Banco Sabadell was right to approach its possible 10 year covered bond with caution. But if it had been serious about the longer tranche, it would have shown the market a representative spread.

Yorkshire Building Society mandated leads for a roadshow on Wednesday to market a euro denominated benchmark covered bond, the issuer’s first in a year.

Muenchener Hypothekenbank returned to covered bonds for the second time this year to fill out its curve with an eight year deal. The bond size was increased following strong demand, partly driven by the recent rise in Bund yields.

Banco Sabadell ended a month-long drought of periphery issuance on Friday by scraping through a €750m five year covered bond sale. A mooted 10 year never appeared.

The Romanian government has approved an update to the country’s covered bond law which will be presented to stakeholders in the near future. The draft, circulated by the finance ministry, proposed to align the current mortgage covered bond framework to better align it with other European jurisdictions.

Banca Monte dei Paschi di Siena (BMPS) could soon become the fourth bank to issue conditional pass-through covered bonds. It has announced a consent solicitation to amend the maturity structure of its existing soft bullet covered bond programme, which according to Moody’s will result in a rating upgrade.

Banco Sabadell was right to approach its possible 10 year covered bond with caution. But if it had been serious about the longer tranche, it would have shown the market a representative spread.

Yorkshire Building Society mandated leads for a roadshow on Wednesday to market a euro denominated benchmark, the issuer’s first in a year. Only two UK borrowers have launched euro benchmarks this year and bankers say a €500m deal with an intermediate maturity should have a good chance of success.

Real money sellers have dominated flows in covered bonds, apart from the very short end where a few bank liquidity buyers were reported on Wednesday. And with Bund yields still at risk of rising beyond their recent highs, a further readjustment in covered bond spreads could be due, bankers and investors told The Cover.

Banco Sabadell was right to approach its possible 10 year covered bond with caution. But if it had been serious about the longer tranche, it would have shown the market a realistic spread.

Michael Weidner, portfolio manager at Lazard Asset Management (Deutschland) GmbH in Frankfurt talks to The Cover about the recent Bund market rout, the rates outlook, what’s in store for covered bonds and how his portfolio has performed.