Covered Bonds

Nordea Eiendomskreditt has priced its first sterling covered bond backed by Norwegian residential loans. The £500m three year floater appealed to investors on a number of counts and provided competitive funding for the issuer.

National Australia Bank attracted a high level of European demand for a dollar denominated deal on Tuesday. The unusually broad distribution pays testimony not only to the novel syndication approach, but also the tempting outright yield relative to what would have been seen in euros.

Standard and Poor’s has downgraded Erste Europaeische Pfandbrief-und Kommunalkreditbank (EEPK) Lettres de Gage (LdG) to BBB+ from A- and has withdrawn the rating. The issuer is being wound down and could potentially terminate all ratings leading to a widening in its spreads.

German banks and their covered bonds are unlikely to be affected by volatility in house prices according to a report published by Standard & Poor's on Wednesday. A 20% decline in prices would barely change the amount of collateral needed to get a top rating.

National Australian Bank has returned to the covered bond market for its second deal in less than a week, opening books for the third dollar benchmark of 2014 on Tuesday. In contrast to the previous two dollar benchmarks issued this year, NAB took a global approach to syndication, encouraging interest from Asian, European as well as US investors.

Jerry Marlatt, senior council at Morrison & Foerster LLP and Dr. Mark Calabria, director of financial regulation studies at the CATO Institute speak to The Cover about the Volcker rule and the outlook for US covered bonds.

Deutsche Pfandbriefbank (PBB) reopened the covered bond primary market with a storm on Tuesday, printing one of the most oversubscribed German deals this year. The book featured a high proportion of international demand for a Pfandbrief, and one of the highest levels of central bank participation on record for a German deal.

Scope Ratings, which hired Standard & Poor’s Credit Market Services managing director and chief of its German operations as its new chief executive, is in talks to hire staffers for an upcoming Pfandbrief rating platform, and is looking to expand its small cap corporates rating business to cover mid and large cap ratings.

Reciprocity creates risks that investors should give careful consideration to. Covered bond consultant Richard Kemmish, talks about these risks in reference to the new functionality of The Cover’s deal database, which maps the web of reciprocity.

Caixabank announced on Sunday that it had bought the Spanish operations of Barclays, subject to regulatory approval. The Cédulas cover pools are likely to be merged, but with the risk metrics of both being fairly similar, the rating impact should be neutral, said Credit Agricole analysts on Monday.

Deutsche Pfandbriefbank has mandated leads for a three year Pfandbrief.

Primary covered bond activity is likely to resume after a lacklustre August, up to eight deals are possible over the course of this month, said bankers.