Covered Bonds

Sparebanken Vest Boligkreditt and Nordea have respectively mandated leads for a roadshow and a deal and another deal from Spain this week has not been ruled out.

Moody’s has reacted positively to the Reserve Bank of New Zealand’s plans to restrict high loan to value mortgage lending.

The quality of Deutsche Pfandbriefbank’s (Pbb) mortgage and public sector cover pools is set to improve at the end of this quarter after a transfer of assets through German wind-up agency FMS Wertmanagement.

Investors should consider switching out of the senior unsecured debt issued by Abbey National and Lloyds Banking Group and buying their covered bonds, said Barclays on Friday. The scarcity of supply in both asset classes has driven a technical tightening which, the analysts say, is not fundamentally justified.

Standard & Poor's has assigned a preliminary triple-A rating to the inaugural €10bn medium term covered-bond programme of La Banque Postale Home Loan SFH. Having roadshowed in July, the issuer is poised to take advantage of strong market conditions by pricing its first transaction in the near future.

Bunds fell this week as investors digested better eurozone growth prospects. But in contrast to the last time yields were at current levels, credit spreads are tighter. Though funding conditions have never looked better, covered bond issuers are in no hurry to bring deals, bankers told EuroWeek.

The Danish auction season kicked off this week and will be notable for offering a new type of longer-dated product that should help to address rating agency concerns over asset-liability mismatches — and help fulfil Basel III’s Net Stable Funding Ratio.

Australia and New Zealand Bank (ANZ) issued an A$700m ($639m) 10 year covered bond last Thursday night in what was the longest-ever maturity for the asset class in that currency. Even though large parts of the Asian market were on holiday, the trade attracted far greater interest than had been expected and priced at tighter levels than could have been achieved in euros.

Vakifbank is yet to mandate banks for its next Eurobond deal, but is “working closely” with Unicredit and Natixis to bring what could be Turkey’s first ever mortgage-backed covered bond transaction, said a funding official at the borrower. Those banks have not been officially mandated for the covered bond.

Turkey’s Ziraat Bank is hoping to launch a debut Eurobond later this year, and has picked banks for a benchmark size transaction. The issuer is also looking at breaking into the covered bond and sukuk markets further down the road as part of an effort to diversify away from deposit funding.

Bunds fell further on Thursday following stronger than expected growth data from France and Germany. But in contrast to the last time yields were at current levels, credit spreads were much wider. Though funding conditions have never looked better, issuers are in no hurry to bring deals, bankers told The Cover.

The primary FIG markets have been languishing in the heat of the summer, with Goldman Sachs providing the only new euro benchmark deal of the week. But the dollar market has seen action and secondary spreads have continued to tighten. Bankers envisage more supply coming towards the end of the month.