Covered Bonds

Banco Santander Chile has issued Chile’s first covered bond, selling a Uf1.5m ($67m) 15 year deal at a level inside the bank’s senior unsecured cost of funding.

Royal Bank of Canada’s recent €2bn seven year covered bond came in for criticism because its final spread of 16bp was deemed too far away from the initial price thoughts that are supposed to help investors make a decision on the relative value of a trade. If they commit to buy with an indication of interest, issuers should have the decency to make sure that the final spread comes reasonably close to the starting point.

Canadian Imperial Bank of Commerce this week attracted a heavily oversubscribed book for its inaugural Canada Housing Mortgage Corporation registered covered bond.

NIBC Bank, the Dutch lender, will press ahead with plans to issue a conditional pass-through covered bond. The move, which came after positive feedback from investors, could catch on with other rating constrained issuers and provide investors with a potentially higher yielding and more stably rated alternative.

Royal Bank of Canada has issued the first Australian dollar covered bond benchmark of 2013, pricing the three year floating rate deal at the tight end of guidance. The depth of demand and the competitive funding could tempt other covered bond issuers to look at the Australian market.

Canadian Imperial Bank of Commerce’s inaugural covered bond backed by Canada’s law has won plaudits from investors and lead managers alike this week. Yet, Royal Bank of Canada’s earlier deal, despite drawing criticism, may turn out to be the one that’s remembered, bankers told The Cover on Thursday.

After Wall Street’s giants basked in the glow of a promising set of second quarter results, some of Europe’s biggest names have had a tougher time this reporting season. Barclays’ results were hit by mis-selling charges, while Deutsche Bank’s profits halved year-on-year as it increased legal provisions and suffered a decline in debt trading.

NIBC Bank, the Dutch lender, confirmed on Friday that it will press ahead with plans to issue a conditional pass-through covered bond. The move, which came after positive feedback from investors, could catch on with other rating constrained issuers and provide investors with a potentially higher yielding and more stably rated alternative.

Canadian Imperial Bank of Commerce attracted a very well oversubscribed book for its inaugural Canada Housing Mortgage Corporation registered covered bond. It opted for €1bn — only half the size of Royal Bank of Canada’s recent euro issue — but its needs are much smaller and it funded tighter than where it could have in US dollars, the leads said.

Royal Bank of Canada has issued the first Australian dollar benchmark of 2013, pricing the three year floating rate deal at the tight end of guidance. The depth of demand and the competitive funding cost could tempt other covered bond issuers to look at the Australian market.

Proposed US legislation, which would protect covered bondholders from losses if a bank fails, is credit positive, Moody’s said this week. However, the law change is unlikely, as it is embedded within controversial plans to reform the US housing market, which may take years to enact, the rating agency added.

Canadian Imperial Bank of Commerce has mandated leads for a euro benchmark that looks set to be priced in the near future, after overcoming a slight delay on documents with its regulator Canada Mortgage and Housing Corporation.