Covered Bonds

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.

The Brewery, London

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.

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.

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.

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.

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.

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.

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.

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. EuroWeek 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.

Italy’s inconclusive election result this week failed to dampen overall sentiment in the European FIG market. Two issuers decided the sub debt and covered bond markets were open for deals on Thursday, and low beta names are expected to re-open the senior market next week, though they may pay up for the privilege.