Covered Bonds

New Zealand’s impending covered bond law is positive for both issuers and investors as it puts them on a level footing with other jurisdictions that already have a law, Fitch said on Monday. The law also enhances reporting requirements, as well as giving certainty on the treatment of assets following an issuer default.

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.

Bank of Scotland is to tender four covered bonds denominated in euros and sterling, it said on Monday.

Covered bond supply should rise to €130bn next year, about 10% more than in 2013 so far, Barclays analysts predict. Spain is set to remain the top performer for fundamental, as well as technical, reasons.

National Australia Bank raised $1.25bn of long five year funding at 47bp on Thursday. However, it did not attract the same demand as Westpac, which priced a $1.5bn deal at 46bp on Monday. Despite its wider spread, NAB priced tighter than Westpac, adjusting for the curve.

Commerzbank returned with its fourth covered bond deal of the year, and the second off its new mortgage platform. After a plethora of German five and seven year Pfandbriefe, the issuer chose to extend its curve with a rare 10 year.

Abbey National Treasury Services, owned by Spain’s Santander Group, became the first UK issuer since February 2012 to launch a benchmark deal in euros.

Westpac returned to the covered bond market for the second week running. After issuing an A$900m 10 year last week it mandated joint leads Citi, JP Morgan, Royal Bank of Canada and Westpac for a benchmark five year deal on Monday

ING is set to become the third Belgian issuer to offer covered bonds after mandating joint leads to roadshow its inaugural covered bond programme, which has a triple-A rating from Fitch and Moody’s.

BPCE issued the most oversubscribed French deal of the last three years this week, drawing some bankers to conclude that it started price thoughts too wide. But after the anaemic reception of its previous deal, a strong result was needed.

Banca Carige’s five year benchmark launched in mid-October was steady on Thursday, with only small selling, after Standard & Poor’s downgraded the bank, due to its rising non-performing loan ratio and concerns over its capital raising.

New Zealand moved a step closer to a legislative framework for covered bonds when its parliament heard the third and final reading of the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill on Wednesday.