Covered Bonds

Attractive spreads have dominated new issues this week, with UniCredit grabbing investors’ attention with its senior coupon and ANZ New Zealand and Kommunalkredit Austria offering eye-catching premiums in covered bonds. But in the bank capital market, holders of Danske’s perpetual tier two bond complained that they were being short changed in a tender offer.

Photos taken at The Cover Awards on September 12 2013 at Casa Llotja de Mar in Barcelona.

Two successful covered bond deals from issuers in New Zealand and Austria have illustrated that borrowers cannot take investors for granted and should respect both investors’ wishes and the advice of their lead groups.

ANZ New Zealand and Kommunalkredit Austria are poised to price €500m five year covered bonds. Both deals have gone without a hitch, with oversubscriptions from a broad range of investors. However, given the lacklustre performance of other recent deals, leads were cautious on pricing and offered attractive spreads.

The following tables show the percentage of votes for winners and runners up across the various covered bond award categories sorted by type of voter along with a summary of the methodology.

Barclays won Global Covered Bond House 2013 in this year’s awards from The Cover. The awards to celebrate the most important achievements in the covered bond market were presented on September 12 at Casa Llotja de Mar in Barcelona. See the full list of all 18 winners.

Europe’s new Label Initiative for covered bonds has won the support of bankers who had previously opposed it. After initially doubting its worth, bankers have completely changed their opinions and now believe the label’s real strength will be its ability to give political protection for the asset class which will be especially important in the context of the proposed bank recovery and resolution regime.

The short end of core European and UK covered bonds are being better offered ahead of a string of expected new issues this week, including Kommunalkredit Austria, which is due to launch a deal in the near future.

Further spread tightening of peripheral covered bonds will limit the number of obvious higher yielding investment opportunities, Jozef Prokes, portfolio manager at Blackrock said at the Euromoney/ECBC Covered Bond Congress in Barcelona on Thursday.

With NIBC about to start its European roadshow for its conditional pass-through structured deal next week, investors are comfortable with it being called a covered bond, the Euromoney/ECBC European Covered Bond Congress heard on Thursday.

Covered bonds are now a widely recognised global product but, in the face of bank deleveraging, the market has seen an unprecedented contraction. EuroWeek's Bill Thornhill spoke to Christian Reusch, global head of IG corporate origination and debt syndicate at UniCredit in Munich, about the outlook for supply, spreads, the impact of bank resolution regimes and prospects for pass-through structures — as well as the importance of reviving the ABS market.

Italy’s Intesa Sanpaolo made a surprise return to the covered bond market on Thursday, launching a €750m five year deal. It has a penchant for bringing deals during the annual Euromoney Covered Bond Congress, having done the same last year. Despite the odd timing and a spread that eventually moved into double digit territory, the deal was priced at the tight end of the range.