Covered Bonds

KBC Bank was on Thursday morning set to price its second-ever covered bond, following Belfius Bank out to the 10 year maturity but with a larger €750m deal that priced just inside its Belgian rival.

The primary market picked up momentum on Thursday with three benchmark deals and one benchmark sized tap being syndicated. ANZ, Bankinter, KBC and Compagnie de Financement Foncier (CFF) unearthed a over €3bn of demand.

ANZ looks set to price the first sterling FRN since last May and its first ever covered bond in that currency. It has returned to the covered bond market for the first time this year to take advantage of swelling demand in sterling.

Market conditions are strong and it seems that almost any FIG issuer can do a deal. But that doesn't mean they can take liberties. Investors can be forgetful, but more often they remember when they have been taken for granted.

Deutsche Pfandbriefbank (Pbb) was back in more familiar territory on Wednesday as it launched its first Pfandbrief of 2013, having been busy setting up a new senior unsecured curve in recent months.

Compagnie de Financement Foncier (CFF) has mandated leads for an increase of its November 2022 issue. Its decision to tap may reflect concerns that newly issued benchmarks may not be eligible for repo with the European Central Bank (ECB).

Terra BoligKreditt became the second Norwegian issuer to supply the market this year and the fifth overall to come with a 10 year or longer maturity. The long maturity, despite being more expensive than a five year, will build its curve and should attract new investors.

Deutsche Genossenschafts-Hypothekenbank was in the Pfandbrief market for the first time in more than six years on Tuesday, selling a €500m seven year that followed other German deals this month in hugging the mid-swaps level.

AIB Mortgage Bank and Deutsche Genossenschafts-Hypothekenbank followed Santander and Belfius on Tuesday with €500m trades that were both easily absorbed. AIB was able to fund itself much more cheaply than its previous deal but bankers felt it could have easily issued a longer maturity.

Rabobank’s subsidiary, Obvion, looks set to price the first Dutch syndicated RMBS of the year at the tightest levels since the crisis. Despite that, the headline spread will be nearly ten times wider than where a putative covered bond deal would price.

Covered bond investors hope to increase holdings this year, even with supply expected to shrink, according to Fitch. However investors said they would decrease Cédulas holdings, despite this sector being the most vibrant so far in 2013.

Belgium's Belfius Bank took advantage of a strong market on Monday to launch its second ever deal. Even though the transaction looks set to be priced through both Belgian and French government bonds, there was little price sensitivity in the book.