Covered Bonds
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A sustained spread rally drew Suncorp Metway back to the covered bond market on Thursday. The borrower had originally scheduled its second Australian dollar benchmark for 2013, but found funding conditions too attractive to ignore.
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The globalisation of the covered bond market is poised to take another leap forward: Sumitomo Mitsui Banking Corp (SMBC) is understood to be in advanced discussions with France’s Autorité des Marchés Financiers (AMF) with a view to issuing a covered bond under the French Obligation Foncière (OF) legal framework, writes Bill Thornhill.
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Norway’s Terra Boligkreditt this week managed to secure its first €1bn-sized covered bond on the back of a €2.5bn book, with nearly a third of the 130 investors involved being new to the borrower.
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Covered bonds from two Japanese banks look increasingly likely. But, in a strange twist, one of the deals nearing fruition could launch under European law, while the other looks set to be structured under local contract law.
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A sustained spread rally drew Suncorp Metway back to the covered bond market on Thursday. The borrower had originally scheduled a second Australian dollar benchmark for 2013, but found funding conditions too attractive to ignore.
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Fitch has downgraded the covered bonds Realkredit Danmark uses to fund adjustable rate mortgage loans, just weeks before the Danish auctions begin. Meanwhile, European covered bond downgrades have increased sharply, Moody’s reported.
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This week’s trades from Terra Boligkreditt and Landesbank Hessen-Thueringen (Helaba) performed well in the secondary market on Wednesday. However, the lower rated Norwegian deal shone brighter, paying testimony not only to the strength of the jurisdiction and collateral but also to Terra’s exceptional marketing effort. -
Landesbank Hessen-Thueringen Girozentrale (Helaba) on Tuesday became only the second issuer in four years to price a benchmark covered bond through mid-swaps.
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Terra Boligkreditt has issued its first €1bn covered bond, following extensive marketing. Not surprisingly, given the paucity of euro denominated covered bond supply, there was plenty of demand from a wide range of investors across Europe.
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After a month in which senior unsecured issuance exceeded covered bond supply by a ratio of 11 to one, covered bond practitioners are anxiously awaiting news on Terra Boligkreditt, which is poised to issue its third benchmark of the year.
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HSH Nordbank has taken the unusual step of using a synthetic securitisation that frees up no regulatory capital at all. Instead, the credit protection provided by KfW on a portfolio of SME loans means they can now be used as collateral in HSH’s public sector Pfandbriefe — the bank’s most important source of term funding.
