Covered Bonds

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.

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.