Covered Bonds

Deutsche Pfandbriefbank (Pbb) launched a €100m three year floating rate Pfandbrief on Tuesday, but syndicate bankers are sceptical that the euro market will manage much more before Easter. The storm around Cyprus may have subsided, but it has reminded issuers how quickly markets can turn and highlighted the value of covered bond collateral.

Banco Santander Chile is planning to launch the first transaction from the country’s new covered bond framework, a funding official at the issuer has told The Cover. After starting with a domestic deal, the borrower could approach international accounts in the future, but the Chilean model has several quirks that could flummox foreign buyers.

Multi-Cédulas came under pressure in the secondary market on Monday after Standard & Poor’s took rating action on 51 classes totalling almost €100bn late last week.

Interest only mortgage loans could destabilise an already stressed Danish housing market, Standard & Poor’s said on Monday.

Kiwibank sold its debut Swiss franc covered bond on Monday morning, drawing healthy demand at a price that tightened slightly from guidance. A lack of competing supply, along with an attractive spread over domestic Pfandbrief issuers, allowed the leads to close books quickly on the oversubscribed trade.

Helge Stray, senior vice president at DNB Boligkreditt’s investor relations and long term funding department, retires from the bank on Friday after 14 years of service.

Crédit Agricole Home Loan SFH was the only borrower to visit the euro covered bond market this week. The issuer sold a €250m tap of a 12 year bond, although syndicate bankers disagreed over the premium the increase offered relative to OATs and the original deal.

Economic imbalances will tear Europe apart, warned Professor Marco Onado of Bocconi University delivering the keynote address at the start of the European Covered Bond Council’s plenary session on Thursday in Rome. The financing of SMEs proved a contentious topic throughout the day, but in a separate development away from the conference, the European Investment Fund (EIF) and UniCredit showed how this could work without relying on covered bonds.

UBS and Swedbank closed dollar benchmarks this week, pricing their deals well inside where they could have funded in euros. Demand in the dollar market far outstrips supply, and the eager investor base should help draw more borrowers looking to take advantage of the arbitrage.

UBS and Swedbank launched successful dollar covered bonds on Thursday, taking advantage of the diversification, tight pricing and low execution risk offered by that market. Both borrowers sold bonds 10bp inside where they could fund in euros, and investors are eager for more supply, said bankers.

Vorarlberger Landes- und Hypothekenbank (Vorarlberger Hypobank) has picked banks to manage its first euro benchmark covered bond, which it plans to launch in mid-April, a funding official at the issuer told EuroWeek.

Bank of Ireland priced a highly successful €500m five year transaction late last week, bringing its longest benchmark covered bond in over three years and radically repricing its curve relative to the Irish sovereign.