Covered Bonds

Van Lanschot Bankiers is expected to open books on Tuesday for its inaugural conditional pass through covered bond. The first Norwegian deal of the year could be announced soon. Meanwhile Berlin Hyp is on the road with its Green covered bond.

Nationwide Building Society is continuing its funding run after already setting a strong precedent in 2014. The bank has priced its first sterling covered bond of 2015 following an earlier euro covered bond, a multi currency RMBS and two senior deals issued this year.

Northern Rock Asset Management (NRAM) announced on Monday that it expects a meeting, to be held in relation to a previously announced covered bond tender offer, to be quorate.

Structured finance and covered bond issuers hoping their deals will escape the waves of downgrades likely to hit the European banking system have had one of their routes out of the bind closed by Fitch. The agency, which could downgrade a third of European banks this year, is consulting on proposals which could effectively block issuers from including “rating removal language” in their deals, by stopping these deals reaching a triple-A rating.

Deutsche Pfandbriefbank (pbb), the German Pfandbriefe issuer that will be privatised this year, said it expects to make a first quarter profit of €45m, even after writing down 50% of its exposure to Heta Asset Resolution.

Covered bond supply surged this week with investors piling into deals that offered little new issue concession and negative spreads, leading to concern that an inflection point was at hand. However, there was no sign of investor pushback, with the tightest deals from core European issuers experiencing a high level of demand. But some bankers were left wondering just how long the superb conditions would last.

Covered bond yields and spreads are spiralling lower and the prospect that wafer thin margins become even tighter has led to a legitimate concern that a turning point may follow. But with the European Central Bank backstopping everything, and the market still offering a decent return compared to Bunds, covered bond investors should be lining up to buy for some time yet.

French covered bond regulations that improve transparency on asset liability mismatches and liquidity tests will not be made public, but they should improve supervisory oversight and lower refinancing risk for investors, said Moody’s on Friday.

Toronto-Dominion Bank smoothly executed the sixth seven year euro covered bond this week despite a Bloomberg blackout delaying the process. The larger than usual €1.25bn deal offered a decent new issue premium and attracted comfortably oversubscribed book.

Covered bond yields and spreads are spiralling lower. The prospect that wafer thin margins grow thinner has led to a legitimate concern that a turning point in investor tolerance may follow.

Covered bond supply surged this week with investors piling into deals that offered little new issue concession and negative spreads, leading to concern that an inflection point was at hand.

BayernLB printed the fourth German dollar covered bond of 2015 on Tuesday. Short dated Pfandbrief issuers are being forced into dollars as issuing in euros would result in negative yields.