Covered Bonds

A trio of covered bond issuers are preparing to launch benchmark euro covered bonds. Landesbank Hessen-Thueringen (Helaba) has mandated leads for a four year deal, ING Belgium is allowing investors a little more time to undertake credit work for a likely five year, while National Bank of Canada is set to resume its roadshow on Thursday.

Covered bond supply will improve in 2014, with gross issuance set to rise by €18bn as long-absent issuers come back to the market, Crédit Agricole covered bond research has predicted. There is scope for a pick-up in supply next year as issuers in regions that have been unable to access the market return, Crédit Agricole said.

Société Générale SFH returned to the covered bond market on Monday after nine months away, to issue a €1bn deal due January 2021. It was only its second deal of the year, down from four deals in 2012. With covered bonds becoming increasingly rare, SG was able to attract a solid book from a wide dispersion of investors and price with a modest new issue premium.

State owned Italian bank, Cassa Depositi e Prestiti (CDP), will start buying securities backed by mortgages, including covered bonds, through its new €5bn Plafond Casa programme, from December 10. This should help liquidity for banks struggling to access the capital markets, as well as subsidise financing to individuals.

CaixaBank will redeem nearly €10bn of retained covered bonds over 13 separate deals in a move that will ramp up its over-collateralisation (OC) and could be a precursor to it issuing a new type of covered bond that will encumber its balance sheet less. Meanwhile, the HBOS plans to tender four deals to optimise its stock of outstanding debt securities.

ING Belgium will finish its roadshow on Friday and National Bank of Canada is set to emerge from blackout next week, increasing the chances of two or three new covered bond deals next week. Primary market conditions remain strong, despite modest profit taking, said bankers on Thursday.

There’s no sign yet of a winter slowdown in the FIG market, with investors still stuffing new senior unsecured and covered bond paper into their portfolios and even a couple of capital trades due to hit the market. Niche currencies are also enjoying a late surge, with Danske Bank, ABN Amro and ANZ all printing on Tuesday.

A successful €3bn share issue from Banca Monte dei Paschi de Siena early next year could bolster the bank’s underperforming covered bonds, RBS research said on Wednesday. It could also lift sentiment for the wider Italian covered bond market, helping other smaller Italian issuers such as Banca Carige, which is also looking to raise capital.

The European Commission has approved the orderly resolution of Crédit Immobilier de France (CIF), according to a statement on Wednesday.

The Danish government's call for a mandatory maturity extension on covered bonds would greatly reduce liquidity risk, but raises questions about its implementation, Fitch said on Wednesday.

State owned Italian bank, Cassa Depositi e Prestiti (CDP), will start buying securities backed by mortgages, including covered bonds, through its new €5bn Plafond Casa programme, from December 10. This should help liquidity for banks struggling to access the capital markets, as well as subsidise financing to individuals.

CaixaBank will redeem nearly €10bn of covered bonds over 13 separate deals in a move that will ramp up its overcollateralisation and could be a precursor to it issuing a new type of covered bond that will encumber its balance sheet less.