Covered Bonds

Arnaud-Guilhem Lamy, a portfolio manager within the euro sovereign and aggregate fixed income team at BNP Paribas Investment Partners (AuM: €32.5bn), speaks to The Cover in a podcast interview about how he is adapting his investment strategy in response to the European Central Bank’s (ECB) third covered bond purchase programme (CBPP3).

Several covered bond issuers have been marketing deals and are ready to launch, but they are unlikely to press ahead until next week at the earliest. In the meantime, they will be closely watching markets on Thursday when the European Central Bank governor Mario Draghi is expected to reveal details of the third covered bond 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 a string of high profile exits from RBS’ covered bond team including Allen Rad, Christoph Anhamm, Frank Will and Jason Wolfe.

Alexander Froschauer, head of German fixed income Germany at Axa Investment Managers (covered bond AuM: €70-€80bn), speaks to The Cover in a podcast interview about the dual challenge of investment and asset liability management in the current fixed income environment.

Harmonising covered bond standards tends to make eyes glaze over. The myriad 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.

Andy Jobst, a senior economist in the European department at the International Monetary Fund, speaks to The Cover in a podcast interview about the future of covered bonds in the European capital markets.

The Swedish Covered Bond Corporation (SBAB) was set to issue a €1bn deal at a historically tight level of 1bp over mid-swaps on a comfortably oversubscribed book on Tuesday. Although the issuer has been out of the market for three years and is considered a solid credit, the deal lacked some of the sparkle of issues seen earlier this month, possibly due to its soft bullet structure.

HSH Nordbank opened books on Tuesday on an Aa3-rated €500m no-grow seven year mortgage-backed Pfandbrief, its second covered bond deal of 2014. Bankers said the level of oversubscription was further evidence of the divergence in popularity between covered bonds likely to be included in the ECB’s third covered bond purchase programme (CBPP3) and those which are likely to be outside, such as Tuesday’s other euro-denominated benchmark, from Swedish Covered Bond Corporation.

Central banking intervention is set to continue shaping the debt capital markets, no more so than in covered bonds which are the target of the European Central Bank’s third purchase programme. This, along with the targeted long term refinancing operations (TLTRO) and negative deposit rates, will lead to lower supply and a further tightening in spreads.

The market has voted and the verdict is in. Leads, issuers and investors (with total AuM of €525bn) voted to select this year’s winners, which were announced at The Cover’s eighth annual awards dinner, held at the Palais Liechtenstein in Vienna on Thursday. Pictures of the winners and graphs showing the distribution of votes have now been added.

HSH Nordbank and the Swedish Covered Bond Corporation (SCBC) mandated leads for euro benchmarks that are likely to be launched on Tuesday.

DNB Boligkreditt returned to the euro covered bond market on Monday to issue its first deal of the year. The transaction looked set to price comfortably through mid-swaps, but it did not enjoy the same degree of price tension as recently issued and highly rated core covered bonds that are likely to be included in the European Central Bank’s third purchase programme (CBPP3).