Covered Bonds
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The covered bond market continued to trade on a stable footing on Monday, even though the US could technically default in less than two weeks. Italy’s UBI Banca successfully priced a €1.25bn deal on a comfortably oversubscribed and granular book, at a very competitive spread.
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Moody's has given a triple-A rating to the Norwegian mortgage covered bonds issued by Sweden’s Skandiabanken, which has an A3 issuer credit rating.
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Caixabank and Lloyds Bank will not use the proceeds of their latest senior unsecured deals to refinance large covered bond redemptions due this month, bankers said on Monday.
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NIBC on Tuesday brought a new structure to the covered bond market that investors wolfed down, prompting hopes of a much-needed supply spree. But the structure has divided the market, with bankers and RMBS and covered bond investors at odds over its potential, reports Bill Thornhill. -
The covered bond market finished this week in a buoyant state, with participants confident that new issue volumes would pick up next week, despite the threat of a US government default the week after. Nevertheless, issuance for the rest of the year will be well below average, and with redemptions exceeding supply by a large margin, the technical squeeze looks likely to remain in place – particularly in Spain.
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UBI Banca is set to make a return to the covered bond market for the first time in two and a half years. After mandating leads for a benchmark euro deal on Friday, books are expected to open on Monday
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Financial markets were forced this week to begin thinking about the risk of a US debt default, though they were still able to act as normal.
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The European Central Bank’s (ECB) clarification of the way in which higher haircuts are applied for retained covered bonds took effect on Tuesday. Crédit Agricole covered bond research praised the new framework for being less harsh than had originally been assumed.
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The European Banking Authority (EBA) on Monday set out new rules will put an end to an accounting gimmick that can flatter bank capital ratios as it published the final draft of its Regulatory Technical Standards (RTS) on close correspondence between the fair value of an institution's covered bonds and the fair value of its assets.
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Despite some investors snubbing NIBC’s popular new conditional pass-through covered bond (CPTCB) structure when it was priced on Tuesday, analysts say there are a number of reasons why the structure should be on RMBS and covered bond investor buy lists alike.
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The strong reception NIBC encountered for its conditional pass-through covered bond from traditional covered bond investors pays testimony to its regulatory endorsement from the Dutch central bank. This approval gave the product a much wider appeal than was initially expected, suggesting there is scope for a broader range of issuers to consider this structure than was first thought.
