Covered Bonds

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 Obligations de Financement de l'Habitat. Having roadshowed in July, it is poised to take advantage of strong market conditions by pricing its first transaction in the near future.

The European covered bond market looked well supported on Tuesday with dealers reporting good interest in the long end after a softening in Bunds.

Hopes have improved for the resumption of covered bond issuance next week, after Goldman Sachs surprised the market with a stellar senior unsecured deal, syndicate bankers told The Cover on Tuesday.

The Danish auction season kicks off this week with Nykredit’s scheduled to start on Thursday and the other Danish banks expected to follow. The auctions 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 a A$700m 10 year covered bond overnight on Thursday, in the longest ever maturing deal in that currency. Large parts of the Asian market were on holiday but the deal attracted far greater interest than had been expected and priced at tighter levels than could have been achieved in euros

Münchener Hypothekenbank priced a €250m tap of its July 2028 covered bond on Wednesday, with demand driven by reverse enquiry and short positions among dealers. Despite a lacklustre launch, the rarity of the name and this tenor suggested it should have performed well — and Wednesday’s tap proved just that.

The Covered Bond Investor Council’s plea for rating agencies to revise methodologies more regularly will be considered, according to a senior analyst at S&P. But changes to the link between covered bond ratings and issuer and sovereign ratings are unlikely, particularly before the terms of new bail-in regimes have been finalised.

Münchener Hypothekenbank priced a €250m tap of its July 2028 on Wednesday with demand driven by reverse enquiry and short positions among dealers. Despite a lacklustre launch, the rarity of the name and this tenor suggested it would always perform well and Wednesday’s tap proved just that.

National Australia Bank has responded to reverse enquiry from cash-laden sterling investors by selling a £500m three year sterling floater on Tuesday, in what is the first piece of benchmark sterling issuance since January.

Banco Santander Chile expects to sell a second covered bond before the end of this year after its inaugural issue last week – the first from the country – beat its own expectations, the bank’s financial manager, Emiliano Muratore, has told EuroWeek.

Berlin-Hannoversche Hypothekenbank sold a €250m long three year Pfandbrief in floating rate format on Monday, in a deal that was largely distributed among the savings bank networks of lead managers Norddeutsche Landesbank and WGZ Bank.

Banco Santander Chile expects to sell a second covered bond before the end of this year after its inaugural issue — and the first from the country — beat its own expectations, the bank’s financial manager Emiliano Muratore told EuroWeek.