Covered Bonds

The increase in retained issuance will have a lasting impact on the primary covered bond market and could reduce benchmark supply to ‘showcase transactions’, Barclays analysts warn.

Standard & Poor’s cut its rating on another pair of Cédulas programmes this week, but the stellar result for Bankinter and UniCredit showed single-A rated trades can still find a stampeding demand. UK buyers bought more than expected in both deals, as syndicate leads pointed to a new class of accounts that could support peripheral transactions.

Bankinter leapt into a market that was rallying hard on Spain and devoid of competing supply on Thursday, to launch a six times subscribed three year Cédulas, writes Bill Thornhill.

Bayerische Landesbank broke the record for the lowest coupon for a dollar benchmark covered bond on Tuesday, launching its first publically syndicated Pfandbrief in that currency since 2005.

UniCredit drew over €1.4bn in orders for a €250m covered bond tap on Wednesday amid a resurgence of risk appetite. In doing so, the bank fulfilled a promise to bondholders to take its historic benchmark deal from August up to jumbo size.

Covered bonds may have caused a growth in mortgage lending and an increase in house prices that now pose a threat to the stability of the Norwegian financial sector, the country’s financial regulator said on Tuesday.

Irish Finance Minister Michael Noonan has rejected a private members’ bill to adopt the Danish balance principle for covered bonds but he will investigate whether some elements of the bill could be rolled out.

Bankinter on Thursday swiftly followed peripheral peer UniCredit’s success from the day before. The Spanish borrower launched a blow-out three year benchmark trade 20bp inside initial price thoughts, as traders struggled to keep up with a big spread rally in peripheral paper.

17 October, 2012 New York Marriott Downtown

As part of a long term shift in its funding strategy, France’s Crédit Foncier is to start issuing RMBS alongside covered bonds. It is set to begin with a private placement in the coming weeks.

UniCredit drew over €1.4bn in orders for a €250m covered bond tap on Wednesday, with peripheral sentiment improving after Spain was spared another rating downgrade. But though investors are eager for southern European FIG issuance, concern over asset encumbrance could push those borrowers than can issue into the senior unsecured market.

Covered bonds may have caused a growth in mortgage lending and an increase in house prices that now pose a threat to the stability of the Norwegian financial sector, the country’s financial regulator said on Tuesday. To address the risk from the rise of secured funding, Norway’s Financial Supervisory Authority is debating whether to follow other jurisdictions and impose limits on covered bond issuance.