Covered Bonds

SNS Bank’s covered bonds are under selling pressure, due to increasing concern about its overall financial health. Covered bond investors are likely to remain at risk of further mark to mark losses but the risk of a payment disruption is highly remote.

Berlin Hypothekenbank has mandated banks for a jumbo five year Pfandbrief and at least one other German name is circling the market. However, bankers told The Cover that issuers will wait for the market to shake off its fatigue before further deals emerge.

Cédulas have dominated covered bond issuance so far in 2013, aided by a remarkable rally that has seen nine deals printed this week. However, oversubscription rates have dwindled this week, and both core and periphery issuers may need to increase what they offer investors to get their attention in a crowded market.

This week’s primary deals have posted a mixed performance, but with the market backdrop still supportive, there is a lot of confidence that spreads will stabilise for the less well placed deals that were seen this week.

KBC Bank and Belfius Bank achieved incredible results this week in terms of their spread levels, which now rival not just the best French covered bond names, but the French and Belgian governments as well

Four peripheral issuers brought covered benchmarks over the last week, but with very different outcomes. While AIB Mortgage Bank and Kuxtabank got excellent receptions, Santander and Bankinter set their own terms and left investors licking their wounds.

Excellent funding conditions drew more covered bond issuers from core Europe to the market this week, with impressive deals done at aggressive spread levels. But bankers cautioned that new issue premiums may have to rise with juicy spreads from peripheral Europe drawing investors’ gaze.

KBC Bank and Belfius Bank achieved incredible results this week in terms of their spread levels, which now rival not just the best French covered bond names, but the French and Belgian governments as well.

Excellent funding conditions drew more covered bond issuers from core Europe to the market this week, with impressive deals done at aggressive spread levels. But bankers cautioned that new issue premiums may have to rise with juicy spreads from peripheral Europe drawing investors’ gaze.

Four peripheral issuers brought covered benchmarks over the last week, but with very different outcomes. While AIB Mortgage Bank and Kuxtabank got excellent receptions, Santander and Bankinter set their own terms and left investors licking their wounds.

ANZ Bank this week priced its first short dated sterling floating rate covered bond in what was also the first such deal since last May.

Compagnie de Financement Foncier supplied the covered bond market with rare French issuance when, on Thursday, it increased its 2.375% November 2022 by €750m to €1.75bn through joint leads Barclays, BNP Paribas, JP Morgan, Natixis and RBS.