Covered Bonds

Compagnie de Financement Fonciere (CFF) has issued the first euro denominated three year conventional covered bond this year. Until recently, short dated covered bonds were trading with a negative yield in euros, something which made them impossible to sell. CFF’s trade has proved that this tenor is now open.

Skandinaviska Enskilda Banken AB (SEB) has mandated leads for its first covered bond since October 2013 and the third only Swedish deal to be issued this year. The deal is likely to offer three times the coupon of the previous Swedish covered bond.

Toronto Dominion was set to price the first covered bond of €1bn or more in nearly six weeks on Tuesday. The five year transaction, which was expected to offer double the coupon of its previous seven year launched in mid-April, was being closely monitored by a number of other issuers who are aiming to launch deals before the onset of summer.

Singaporean covered bond issuance could soon be on the way after the country’s monetary authority, MAS, published feedback on the updated regulatory guidelines it proposed in January. The first deal from DBS could emerge in weeks.

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.