Covered Bonds

Berlin Hyp (BHH) priced a €500m three year Pfandbrief on Tuesday, of which nearly half was sold to international investors. The broad distribution, which came as a positive surprise, suggests an overriding investor need to shorten duration, which in turn implies fear of further volatility this year.

Banco Popular Espanol has mandated leads for a long five year Cedulas benchmark, the second from Spain in that maturity this year.

AIB Mortgage Bank has priced its second covered bond of the year, and in contrast to the last Irish covered bond deal, it enjoyed a stronger reception which was particularly helped by a big improvement in the spread over Irish government bonds as well as a repricing of the market.

Spanish and Italian covered bonds now account for sizeable portion of the total amount of covered bonds that are eligible for inclusion in the highest category of the liquidity coverage ratio said Natixis research analysts who have published a handy reference guide.

Covered bond issuers have provided more than €7bn of supply this week after a moribund spell, proving themselves to be more nimble and opportunistic than perhaps ever before.

Time is up for the covered bond lemmings. They’ve had it too easy for too long. Gone are the days of pricing a covered bond exactly where your neighbour wished they had printed theirs. Issuers need to be nimble and bankers insightful.

UniCredit Bank AG (HVB) proved that investor appetite for duration is returning on Friday when it took a €2.2bn book for its eight year €500m Pfandbrief. Only two other issuers have printed this rare tenor in 2015.

The covered bond market proved itself fully open for business this week with eight issues taking in more than €7bn of orders combined.

Covered bond issuers have provided more than €7bn of supply this week after a moribund spell, proving themselves to be more nimble and opportunistic than perhaps ever before.

Bank of Nova Scotia, the third Canadian institution to issue a covered bond this week, took €1.25bn with its five year covered bond on Thursday. While the books were slightly slower to build than market rivals BPCE and Commerzbank, the result was still a strong one for the issuer.

Greek parliament gave bankers the result they were hoping for on Wednesday night, providing strong market conditions for two well established eurozone issuers — Commerzbank and BPCE — to issue five year bonds, taking a combined €1bn in the covered bond market. Sizable orderbooks and minimal new issue premiums proved that the market is very much in full operating mode.

Lloyds returned to covered bonds on Wednesday for its annual benchmark in euros. At €1.5bn, the five year was one of the largest this year, and with a book of over €2.5bn, it was one of the most heavily oversubscribed. The strong result was a testimony to the generous new issue premium which catalysed switching interest and caused a healthy repricing of the curve.