Covered Bonds
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Several European borrowers launched well received senior unsecured deals and covered bonds this week making a mockery of fears over the impact of the US’s shutdown troubles. CaixaBank, Banca Popolare dell’Emilia Romagna and UBI Banca flew the flag for the periphery, while Lloyds Bank hit the senior market after an 18 month hiatus.
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Italy’s Mediobanca decided not to press ahead with a covered bond debut on Wednesday as the Republic of Italy launched a seven year BTP on the same day. Instead the issuer is expected to launch a deal targeting the mid to long end of the curve on Thursday, when it is likely to be joined by Commerzbank, which has mandated for a seven year mortgage Pfandbrief.
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Commerzbank plans to issue a seven year mortgage Pfandbrief on Thursday, in its first mortgage-backed deal not issued from Eurohypo’s programme.
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Activity in the primary covered bond market picked up on Tuesday as two issuers from Europe’s core and periphery launched deals. Both were warmly received, but the difference in the cost of funding between them was more than 200bp — which, given the possibility of another injection of extraordinary long-term central bank liquidity, may not have been justified.
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Moody’s has assigned a triple A rating to the €199m of commercial mortgage back Pfandbriefe issued by NATIXIS Pfandbriefbank AG.
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Spain’s new export finance covered bonds, Bonos de Internacionalización (BI), have a weaker credit profile than existing export finance covered bonds but greater flexibility, Moody’s said this week. The Spanish authorities’ introduction of the new bonds comes as they work to improve the efficiency of covered bonds as a funding tool.
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Moody's has assigned a long-term rating to the mortgage covered bonds of Slovakia’s Vseobecna uverova banka (VUB). The bonds, which are legally enshrined within the Slovak Bond Act, are rated at A1, two notches above the issuer’s A3 rating.
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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.
