Covered Bonds

The Spanish government has published a new securitization law which is expected to allow issuers to structure covered bonds backed by a segregated pool. The move could spur issuers to consider conditional pass through structures backed by a broad range of assets, said analysts at Moody’s and Société Générale.

Until recently, green covered bonds were always more of a theoretical discussion than one that had taken root. But they could be just what the central bank-oppressed market needs.

Until recently, green covered bonds were always more of a theoretical discussion than one that had taken root. But on Monday, the asset class took a giant leap forward as Berlin Hyp issued its €500m seven year Grüner Pfandbrief, a transaction that was placed with many new types of investor. The deal could be just what the central bank-oppressed market needs.

BNP Paribas made an opportunistic move to price the first 10 year covered bond in over a month on Tuesday via an intraday execution. Strong demand and a book that was twice covered allowed the issuer to increase the size of the deal to €750m from €500m and enabling pricing almost flat to BNP Paribas’ existing curve.

The assets of distressed Austrian bank Oevag will be divided between a bad bank and Volksbank Wien-Baden. Unlike the case of Kommunalkredit however, all of the bank’s outstanding covered bonds will be transferred to Volksbank. Analysts say this indicates the Austrian regulator is returning to a more traditional and investor friendly method of bank splitting.

Berlin Hyp on Monday reaped the rewards of its extensive roadshow and attracted the highest oversubscription of any German covered bond issued this year at the tightest spread for the tenor. The astonishing result was achieved with the help of Green and SRI investors that bought 48% of deal. The transaction sends a strong signal to other covered bond borrowers that Green covered bonds diversify funding, suggesting they have a bright future.

UK covered bond programmes have the highest foreign exchange gap according to Moody’s. But the fact UK issuers have issued predominately issued in sterling this year shows they are attempting to reduce this exposure.

UniCredit’s covered bond research analyst, Florian Hillenbrand, will move to the buyside as a portfolio manager with UniCredit AG from early May.

Berlin Hypothekenbank is readying the market’s first Green Pfandbrief and is likely to launch the bond on Monday or Tuesday next week. Analysts expect there to be a minimal spread difference between the borrower’s green and conventional curves.

Three euro benchmark covered bonds were issued this week from borrowers in Belgium, Norway and the Netherlands. But it was the debut Dutch conditional pass through (CPT) structure from Van Lanschot Bankiers that proved the most interesting.

UniCredit Bank Czech Republic and Slovakia printed the first covered bond to be backed by a mix of Czech and Slovakian mortgages on Thursday. The bond has been expected since the borrower first met investors on a roadshow in November.

Nationwide Building Society this week priced its first sterling covered bond of 2015 following an earlier euro covered bond, a multi-currency RMBS and two senior deals issued already this year.