Covered Bonds

Deutsche Pfandbriefbank (Pbb) returned to the public sector Pfandbrief market in style this week. It extended the German covered bond curve with an impressive 15 year deal and plans to issue at least one public sector backed bond a year, it told The Cover.

Deutsche Pfandbriefbank launched the longest German Pfandbrief in a decade this week, pricing a €500m 15 year deal. Its success in an unusual tenor illustrates just how flexible investors have become, said syndicate officials. But bankers are divided over the potential for more ultra-long dated covered bonds.

Belgium’s KBC Bank returned to the covered bond market for the second time this year to pull in €1bn of funding on Tuesday at pricing so tight that one of the leads called it "screamingly good".

Rare issuer WL Bank priced a €500m seven year Pfandbrief almost flat to mid-swaps on Thursday, to the surprise of some syndicate bankers on the deal.

Dollar benchmark covered bond issuance for 2013 rose by over 40% in the last week to $13.5bn as three issuers collectively raised $4bn, drawing $5.2bn of interest over 150 orders.

Speaking to The Cover on Thursday, SEB’s head of treasury management John Wang emphasised the granularity of the book for the bank’s inaugural dollar trade that was launched on Tuesday.

WL Bank priced a €500m seven year Pfandbrief almost flat to mid-swaps on Thursday, to the surprise of some syndicate bankers on the deal.

Westpac became the third issuer in less than a week, and the 10th this year, to tap the US dollar covered bond market. After mandating joint leads for a $1.25bn transaction on Wednesday the deal was priced at the tight end of guidance at 35bp over mid-swaps, which was the tightest five year print in dollars so far this year.

The fuss over covered bond issuance and the impact of asset encumbrance on the senior unsecured claim is nothing more than a warm-up act for the main show — the fading away of senior unsecured bank debt due to depositor preference.

Deutsche Pfandbriefbank launched the longest German Pfandbrief in nine years on Wednesday, pricing a €500m 15 year deal. The potential for more ultra-long dated deals is limited, but Pbb’s success in an unusual tenor illustrates just how flexible desperate investors have become, said bankers.

Skandinaviska Enskilda Banken successfully issued its maiden dollar denominated covered bond on Tuesday, attracting a comfortably oversubscribed and granular book at a funding level that was close to what it could have achieved in the local market. Westpac has mandated leads for a follow on 144A dollar benchmark.

Rare issuer WL Bank has picked banks to manage its latest Pfandbrief and is aiming to launch a seven year euro denominated bond as early as Thursday, said bankers.