Covered Bonds

OTP Mortgage Bank on Thursday launched the first euro covered bond from Hungary since November 2011, uncovering enough demand to increase a short dated floating rated trade. Meanwhile, National Australia Bank’s recent 14 year sterling offering has widened in the secondary market, after demand proved lacklustre for its attempted long end benchmark.

Credito Emiliano has become the fifth Italian bank to set up a separate covered bond programme to access European Central Bank (ECB) repo funding. But bankers warn that these programmes could have a negative effect on issuers’ original public programmes, even though they help improve banks’ liquidity. This article has one comment.

OTP Mortgage Bank on Thursday opened books on a €500m 2-1/2 year floating rate covered bond through sole lead BNP Paribas, with guidance set at 400bp over three month Euribor.

Moody’s upgrade of Korea provided a welcome boost to covered bond issuers on Wednesday. Korea Housing Finance Corp’s two covered trades were raised as a result and Kookmin Bank’s could follow, with only weeks before domestic legislation is due to go before parliament.

Royal Bank of Canada could soon announce the mandate for the first SEC registered deal. The SEC approved RBC’s $12bn covered programme at the end of July but as the bank was about to enter blackout, its first SEC registered deal was not expected to surface until the end of August — subject to market conditions.

Moody's has assigned a top rating to Landesbank Berlin’s (LBB) Daheim Series 1-2012 structured covered bond, a deal notable for its lack of a Pfandbrief label.

National Australia Bank opened books on an ultra long dated sterling benchmark on Wednesday hot on the heels of Commonwealth Bank of Australia, which became the first non-UK issuer to tap the sterling long end less than a week ago.

SSA and corporate markets were busy on Tuesday, keeping the primary covered bond quiet. But issuance should improve this week as investors filter back from holiday, said bankers, though they warned that as spreads have tightened a long way in a short time the market may widen after the initial flurry of deals.

Moody’s cut CIF Euromortgage’s covered bonds from triple-A to Aa1 on Tuesday, after lowering the sponsor bank’s senior and short term debt ratings. The Credit Immobilier de France (CIF) group has not yet found a buyer after starting a sale process in June, and though state support is highly likely it remains locked out of the capital market with redemptions approaching.

Another milestone was set in the development of the sterling covered bond market this week when Commonwealth Bank of Australia became the first foreign issuer to price an ultra-long dated covered bond — and only the second non-domestic borrower to issue in sterling

Germany’s Schuldschein product could be set to develop into a new area, with issuers calling for a secured format.

Amendments, adopted this week, to Germany’s Pfandbrief Act that increase transparency are positive for investors but there will be no ratings impact from the Article 28 changes, said Fitch.