Covered Bonds

Buybacks of multi cédulas, which covered bond bankers had previously thought impossible, could now be on the cards. Ahorro Corporacion Financiera (ACF) told The Cover on Thursday that a partial amortisation of the AyT multi cédulas deals that it arranged could happen, after a positive signal from the Spanish regulator and affirmation from the rating agencies.

Bankinter has taken advantage of robust demand for higher yielding Spanish bank debt and, following the huge success of Caixabank’s three year senior deal, it launched a 3.5 year Cédulas on Thursday. The search for yield was strongly in evidence and, in little over an hour, the borrower attracted a book that was more than seven times covered, allowing it to fix the spread 25bp inside initial price thoughts.

The worlds of securitisation and covered bonds are colliding as issuers and investors wrestle with rating volatility. After Commerzbank announced its groundbreaking SME structured covered bond, which relies on a pass through structure traditionally used in securitisations, NIBC is looking at a new covered bond programme that would also feature a pass through structure.

Commonwealth Bank of Australia is ready to launch the first Australian covered bond of the year, after mandating banks for a benchmark US dollar deal that an official close to the deal told The Cover was likely to come on Wednesday. The Australian covered market is set to be the fastest growing this year, with Fitch predicting up to $37bn of supply.

Credit Suisse is merging its debt capital markets group and its corporate debt derivatives group into a single unit, in a move to harmonise client coverage between the two business areas.

Finland’s Nordea Bank is expected to price a €1.25bn covered bond flat to its own curve on the back of a comfortably oversubscribed book. Given the strength and rarity of the credit and jurisdiction, a positive result was never in doubt, lead managers told The Cover

The rules governing lower rated covered bonds in Basel’s new liquidity coverage ratio are unclear and have prompted three completely different interpretations from market analysts this week.

Italian banks are set to issue covered bonds in the wake of UniCredit’s inspirational deal on Monday, after it attracted the largest book yet for an Italian covered bond. However, bankers are divided over whether tier two banks will move before the country’s elections on February 24, or wait until April.

Banking industry professionals have welcome the Basel Committee for Banking Supervision’s decision to expand the range of assets banks can hold in their liquidity coverage ratio (LCR) buffer, as well as the delayed implementation date. However, some market participants are concerned that the buffer’s focus on government debt does little to break the negative feedback loop between banks and sovereigns.

UniCredit put on a demonstration of the New Year’s appetite for risk on Monday morning when it priced a €1bn seven year covered bond from a €6.5bn book. Demand for the deal has been granular with the pricing, at 150bp over mid-swaps, being 90bp through the government curve.

Commerzbank has mandated leads for Europe’s first ever SME structured covered bond. Meanwhile, the success of UniCredit’s seven year on Monday, could spur deals from German, Nordic and possibly Spanish issuers, bankers told The Cover. However, secondary market activity has slowed after a brisk start last week.

Caisse de Refinancement de l'Habitat (CRH) on Friday priced the first covered bond of the year and despite very tight pricing to the OAT it managed to attract high demand, particularly from Germany. Scarcity of supply was always going to be a help, but a 25bp rise in Bund yields in the last few days also played a part.