Covered Bonds
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Spanish Cédulas are in demand, following the outperformance of the Bono over the last week. However, this flies in the face of fundamental credit risks, which Moody’s has warned are very high.
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HSH Nordbank closed books on a three year public sector Pfandbrief on Wednesday, easily finding enough demand for a €500m no grow transaction, despite its exposure to the shipping industry, which put some buyers off, said bankers.
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Under a new model, that will be used to analyse Canadian covered bonds, Fitch said on Tuesday that Canadian house prices were overvalued by a real 20%, which is more than bankers had previously said.
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Norway’s banks should be monitored case-by-case on mortgage transfers to covered bond issuers, the country’s regulator has said. Bankers had feared it could impose a hard cap across the whole industry.
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Overcollateralisation has a big influence on the ratings of covered bond but it is not a good guide to their resilience and rating stability, according to DZ Bank.
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Norway’s central bank on Monday announced its latest offer to terminate early the covered bond swap arrangements it has with Norwegian banks, allowing them to free up covered bond collateral and help support primary issuance, said bankers.
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The secondary covered bond market was busy on Monday, with dealers reporting large trades in multi-Cédulas, which have held steady, and better buying of Italian covered bonds, which are tightening.
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When is a covered bond not a covered bond? Commerzbank’s controversial SME structured deal generated much emotion at the IMN covered bond conference in London this week. In a show of hands, almost all delegates thought the issuer should not have been able to market it as a covered bond. The Cover looks into the reasons for their disapproval and considers the arguments for the defence. Whoever is right, Commerz has given the market a new headache. -
Aareal Bank launched the third short dated floating rate Pfandbrief in the last week on Friday, after bank treasuries looking for safe haven paper approached the issuer. Several of Aareal’s peers are lining up longer dated benchmark deals, but a surge in Bund futures could put their plans on hold.
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Bankia became the latest Spanish issuer to announce a covered bond buyback on Friday, and will take offers on several mortgage backed Cédulas over the next two weeks.
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Bankia became the latest Spanish issuer to announce a covered bond buyback on Friday, and will take offers on several mortgage backed Cédulas over the next two weeks.
