Covered Bonds
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Austrian duo Hypo Noe Gruppe Bank and Bank für Arbeit und Wirtschaft (Bawag) launched twin seven year covered bond benchmarks this week, which were eagerly pounced upon by domestic and German buyers looking for spread and diversification.
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Crédit Agricole launched the first French covered bond in almost six months on Monday, making its debut in the Obligations Foncièrs (OF) format. French peer Axa Bank followed close behind, but its Belgian RMBS-backed deal failed to attract the same strong reception.
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Intesa Sanpaolo has become the second issuer to price a deal through its own government, following UniCredit’s historic trade in August.
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Winners of The Cover’s 2012 Covered Bond Awards will be revealed on Thursday night.
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Intesa Sanpaolo has become the second issuer to price a deal through its own government, following UniCredit’s historic trade in August.
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Royal Bank Canada has priced the first SEC registered covered bond in what is likely to be the landmark US dollar trade of the year. The long awaited deal was notable for the breadth of investor demand, its historically low coupon and exceptionally tight spread.
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The AA- rating threshold for the eligibility of covered bonds in bank liquidity buffers proposed under Basel III’s Liquidity Coverage Ratio (LCR) could be dropped under proposals for the fourth iteration of the Capital Requirements Directive (CRD IV), the European Covered Bond Council’s plenary session in Munich heard on Wednesday. CRD IV is the European Union's vehicle for implementing the Basel III regime.
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The covered bond market could face hard limits on bond issuance, thanks to asset encumbrance, the European Covered Bond Council’s plenary session in Munich heard on Wednesday.
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France’s Axa Bank has returned to the market after a five months with a €500m seven year Obligation Foncière (OF). Though the transaction is backed by Belgian residential mortgages, it is structured under French law and, while it offers a decent premium against French OATs, the spread to Belgian OLOs is unattractive.
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Crédit Agricole has promoted its head of covered bond syndicate to a more wider-reaching role covering financial institutions and ABS.
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A group of central bankers, portfolio managers and investment bankers came together in mid-August 2012 to discuss the covered bond market in the context of the sovereign debt crisis. Despite a fundamental belief in the soundness of the covered bond product, the roundtable participants warned of the dangers of the inextricable link between a sovereign entity, the issuers within its jurisdiction and their covered bond programmes.