Covered Bonds

Co-operative Bank has asked holders of its £600m Moorland covered bonds due November 2021 to vote on an extraordinary resolution.

The bank capital market is ablaze this week, with Barclays’ additional tier one deal on Tuesday being followed by a low trigger tier one trade from Credit Suisse and a rights issue and preference share sale for Bank of Ireland on Wednesday. Covered bonds and ABS have continued apace, but like senior unsecured, those markets are slowing down as Christmas approaches.

Investors have not turned in for Christmas quite yet, but bankers expect few issuers will to try to pre-fund over the rest of December. The success of ING Belgium’s €1bn five year on Tuesday could, however, entice one more Belgian issuer to market before year-end.

ING Belgium made a successful covered bond debut on Tuesday, attracting a heavily oversubscribed order book for the €1bn five year trade.

Bracingly tight spreads for outstanding Pfandbriefe from top tier issuers meant the book build for Landesbank Hessen-Thueringen’s (Helaba) €750m four year bond was quite slow on Tuesday, even after it offered a concession to secondary levels.

Bank of Scotland has bought back €2.92bn and £206m of debt from three euro and one sterling-denominated covered bond, paying a purchase price above par for all four bonds.

Frank Will has left RBS, where he had been head of covered bond and SSA research since May 2005.

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.