Covered Bonds

Secondary covered bond market flows have started to improve this week compared to last, though activity is more focused on the supra sovereign agency sector which traders say offers greater relative value to core covered bonds.

Nearly a year after registering its covered bond programme with the US Securities and Exchange Commission, Canadian issuer Bank of Nova Scotia filed its prospectus. The move is a likely precursor to a dollar issue.

Covered bonds are expected to tighten, as the fall in Bund yields and expectations of lower supply boost sentiment.

Extension risk is no longer a factor in the pricing of covered bonds. Deals auctioned this week in Denmark priced flat to existing bullet maturity deals, while last week ING received regulatory approval for a new soft bullet covered bond programme that issues bonds with extension risk. ING expects to sell these at the same level as its existing hard bullet deals.

Landesbank Hessen-Thüringen (Helaba) tapped the three year leg of its dual tranche issue from May on Thursday morning, mirroring the syndication strategy it used to tap the deal’s seven year leg in July — aggressive pricing and doubling the size of the issue.

Brazil's finance ministry has told GlobalCapital that it will publish proposals for a covered bond legal framework next week. The proposals are a part of an overall package that aims to free up the flow of credit and was presented by the minister of finance, Guido Mantega, on Wednesday. Bill Thornhill reports.

Brazil's finance ministry has confirmed with The Cover that it will publish proposals for a covered bond legal framework next week. The proposals are a part of an overall package which aims to free up the flow of credit. Bankers are hopeful that the timescale to implementation will be quick, but warn that many frameworks have failed to attract the attention of foreign investors, ostensibly due to oversights over minor details.

RBS was unable to attract a sufficient quorum to pass a series of swap amendments to its covered bond programme.

Landesbank Hessen-Thueringen (Helaba) tapped the three year leg of its dual-tranche issue from May on Thursday morning, mirroring the syndication strategy it used to tap the deal’s seven year leg in July — aggressive pricing and doubling the size of the issue.

The Covered Bond Investor Council has published a report which reviews progress in the field of transparency and makes recommendations. The report says there is still a clear need for data that is easily accessible, comparable, and which goes beyond the minimum requirements set by the ECBC Label.

The International Capital Market Association’s (ICMA) Covered Bond Investor Council (CBIC) has responded to a consultation paper that was launched by the European Securities and Markets Authority (ESMA) in July, requesting an alignment of covered bond definitions with existing regulatory frameworks.

The value of your house is a popular subject at middle class dinner parties everywhere, but the far more important loan-to-value (LTV) ratio never comes up.