Covered Bonds

Covered bonds are set to be counted as level one assets under Basel III’s liquidity coverage ratio (LCR), according to documents seen by The Cover.

The covered bond market is increasingly being viewed as a macro policy tool that is at the heart of wholesale bank financing within the European economy – as exemplified this week in two leaked policy documents alongside talk that European laws could soon be changed to encourage SME funding.

Société Générale returned to the covered bond market with only the second French benchmark of the year on Wednesday. It raised €1bn in the blink of an eye and priced through its own curve, highlighting an acutely squeezed French market.

Covered bonds are set to be counted as level one assets under Basel III’s liquidity coverage ratio (LCR), according to documents seen by EuroWeek Bank Finance.

More than €1bn of demand vindicated Commerzbank’s groundbreaking SME structured covered bond this week and ushered in a new financing tool for smaller European companies.

Caisse de Refinancement de L’Habitat has sold the first Swiss franc covered bond in almost six months. A good reputation among Swiss investors and upcoming redemptions helped CRH to price the deal through its Swiss franc curve.

Cassa Depositi e Prestiti (CDP), the Italian public financing agency, is expected to decide at the end of February whether and how to proceed with proposals that aim to funnel long term funding to Italy’s smaller banking groups.

Nordic issuers SEB and Danske Bank each made a surprise return to covered bond markets this week after absences lasting almost two years.

Commerzbank’s long awaited SME structured covered bond, finally priced on Thursday, showed that, despite all the doubts, there is plenty of interest for this type of structure and asset, which came at an attractive spread.

After being absent from the euro covered bond market for nearly two years, Danske Bank made a surprise return on Thursday, mandating leads and opening books for a €1bn seven year deal priced at the tight end of guidance.

Caisse de Refinancement de L’Habitat has sold the first Swiss franc covered bond in almost six months. Its good reputation among Swiss investors and upcoming redemptions helped CRH to price the deal through its Swiss franc curve.

Société Générale has returned to the covered bond market with only the second French benchmark of the year. It raised €1bn in the blink of an eye and priced through its own curve, highlighting the acutely squeezed French market.