Covered Bonds

Deutsche Pfandbriefbank (pbb) and Dexia Kommunalbank are both exposed to bonds which are likely to be written down following the debt moratorium issued by Heta Asset Resolution — the Hypo Alpe Adria bad bank — last week. Several other German covered bond issuers are likely to be affected, said Commerzbank analysts. Austrian issuers are also being hit and have been put on review for downgrade by Moody’s.

Muenchener Hypothekenbank (MuHyp) issued the tightest ever 10 year covered bond on Monday with a book that was built in record time. At €750m the deal was much larger than anything seen in Germany in this tenor for several years. The strong uptake underscores the fact that, despite the extraordinarily tight price and large size, the rare transaction offered compelling relative value.

The covered bond world descended on Canary Wharf for the IMN annual covered bond conference this week, for discussions on the credit (or is it rates?) product that still delivers a meaningful amount of FIG funding.

Euro covered bond issuers launched benchmarks this week and showed the unrelenting momentum in the compression of spreads has continued unabated.

Nord/LB attracted a large and well diversified book for its inaugural benchmark sized €500m no grow five year public sector Lettre de Gage on Monday.

Dutch issuer Van Lanschot Bankiers has become the third issuer to set up a conditional pass through (CPT) mortgage covered bond programme, joining NIBC Bank and UniCredit. Pending successful registration with the Dutch central bank, a deal should be coming soon.

The European Banking Authority has closed off all routes around the bonus cap, with new guidance published on Wednesday.

8th Annual Global Covered Bonds Conference

The newly updated covered bond map from The Cover, in conjunction with Société Générale, is now available online and in hard copy.

The Cover interviews Luca Bertalot, head of the European Covered Bond Council, and Carsten Trisbæk Madsen, Chairman of the ECBC, on how covered bonds and dual recourse structures can play a role in Europe’s Capital Markets Union. [Best seen on Google Chrome or the latest version of Internet Explorer]

Swedbank and HSBC both issued €1bn euro-denominated seven year covered bonds on Wednesday. The slim pricing differential between the two transactions neatly illustrated that covered bonds not eligible for the European Central Bank’s purchasing programme have caught up with those that are.

Dutch issuer Van Lanschot Bankiers has become the third issuer to set up a conditional pass through programme, joining NIBC and UniCredit. Pending successful registration with the Dutch central bank, a deal should be coming soon.