Covered Bonds

Banco Popular Español (BPE) issued the third Cédulas of 2014 and at €1bn, the issuer’s largest covered bond in three years. Though it was by no means the most attractive spread this year it was less than half the average of its previous three deals.

NIBC Bank returned to the covered bond market this week to launch its second conditional pass-through covered bond (CPTCB). The book suggested that the issuer attracted a greater scale of demand from a wider group of buyers than in its first deal. The growing acceptance of this innovative product at a much tighter spread bodes well for future use of the structure.

Berlin Hypothekenbank mandated joint leads on Monday for a euro Pfandbrief and a roadshow to explain its new ownership structure. The mortgage bank will be directly owned by the savings banks and will become an affiliate of Landesbank Berlin, rather than its subsidiary.

Germany’s Hypovereinsbank (HVB) and Bayerische Landesbank (BayernLB) launched Pfandbrief deals of the same size and tenor this week. But with a marginally lower rating, and hence a wider spread, HVB was able to attract a more granular book.

An overhaul of Polish covered bond law will increase issuance, said market participants. The reforms should raise loan-to-value limits, allow soft bullets and mandate minimum overcollateralisation, according to an English translation of the text obtained by GlobalCapital.

With deleveraging nowhere near finished and loan growth in most European banking sectors sluggish, covered bond bankers are struggling to see an end to dwindling supply and tightening spreads. The Cover goes in search of anything that could buck the trend.

The French covered bond legal framework is in the process of being redrafted with an updated and improved law expected to emerge, possibly before summer, said panellists at the European Covered Bond Council’s plenary session in Paris on Thursday.

Banking union, the single supervisory mechanism and the single resolution fund should theoretically sever the sovereign-bank link, said representatives of the European Commission, the European Central Bank and the European Banking Federation at the European Covered Bond Council’s plenary session in Paris. However, the authorities did not actually know who ultimately had the responsibility to grant or take away a covered bond bank’s license which left delegates wondering who would ultimately be responsible for covered bond supervision.

Hypovereinsbank followed Bayerische Landesbank (BayernLB) on Wednesday with a similarly sized deal of the same tenor. But with a marginally lower rating, and hence a wider spread, it was able to attract an incrementally larger book.

Leading industry figures have told The Cover they expect a legal overhaul of the Polish covered bond law to mean increased volumes from the sector, as the reforms should raise LTV limits, allow soft bullets, and mandate minimum OC, according to an exclusive English translation of the text obtained by The Cover. The law change is supposed to encourage Polish banks to term out their funding by making covered bonds a more attractive funding source.

Banco Popular Español (BPE) returned to the covered bond market on Tuesday to issue only the third Cédulas of 2014, and the issuer’s largest covered bond in three years. Though by no means the most attractive spread seen this year, the triple digit pick-up enticed a broad audience of real money investors.

NIBC Bank returned to the covered bond market on Tuesday to launch its second conditional pass-through covered bond (CPTCB). The unreconciled book suggested that the issuer attracted greater scale of demand from a wider group of buyers compared to its first deal. The growing acceptance of this innovative product at a much tighter spread bodes well for future use of this structure.