Covered Bonds

Covered bond bankers spoke to The Cover in the immediate aftermath of the European Central Bank’s announcement of its third covered bond purchase programme. Though the programme is bullish for spreads, bankers said the ECB would struggle to expand its balance sheet.

Ms Koh Chin Chin, head of the group central treasury unit at United Overseas Bank (UOB) speaks to The Cover in a podcast interview about the status of Singapore's forthcoming covered bond law and the ambition her bank has for use of the asset class.

Sub-investment grade ABS and covered bonds will be on the European Central Bank’s shopping list when it begins the private sector purchase programme it hopes will revive real economy lending this month. But stakeholders in both markets remain unconvinced of the size the ECB can achieve and many now see the move as a mere stepping stone to full-blown quantitative easing.

Four issuers launched covered bonds from Germany, Sweden, Norway and Austria this week. The transactions were all well subscribed and priced tightly but the greatest degree of price tension was seen in deals that are expected to be eligible for the European Central Bank’s purchase programme.

Harmonising covered bond standards tends to make eyes glaze over. The myriad of different regimes and labyrinth of technicalities involved can seem baffling and trivial. But it would be a mistake to believe the project is an open-ended soft option that will never really happen. Harmonisation will materialise and progress will be monitored, suggesting everyone needs to be up to speed.

Jez Walsh has left Royal Bank of Scotland where he had been in charge of covered bond syndication for 15 years. His departure follows a string of high profile exits from the bank’s covered bond team including Allen Rad, Christoph Anhamm, Sophie Kwon, Frank Will and Jason Wolfe.

Lars Overby, head of credit, market and operational risk policy unit at the European Banking Authority, in discussion with Bill Thornhill, editor of The Cover, about the challenges facing harmonisation of the asset class.

The European Central Bank said it will begin buying in mid-October for at least two years. Covered bond markets were well supported on Thursday, hours before the central bank announced details of its third purchase programme (CBPP3).

Jez Walsh has left Royal Bank of Scotland where he had been in charge of covered bond syndication for 15 years. His departure follows Allen Rad who had traded covered bonds since 2008 and Christoph Anhamm who had been in charge of covered bond origination.

The European Central Bank’s purchases of ABS and covered bonds may start next month and last four years.

Harmonising covered bond standards tends to make eyes glaze over. The myriad of different regimes and labyrinth of technicalities involved can seem baffling and trivial. But it would be a mistake to believe the project is an open-ended soft option that will never really happen. Harmonisation will materialise and progress will be monitored, suggesting everyone needs to be up to speed.

Austrian lender Hypo Tyrol issued its first publicly distributed deal on Wednesday, pricing a sub benchmark sized €300m public sector Pfandbrief. The transaction’s smaller than usual size meant it was not eligible for the covered bond indices, which deterred large investors. However, investors were compensated for the less liquid size with a wider than usual spread.