Covered Bonds

NordLB launched the first ever aircraft Pfandbrief (Flugzeugpfandbrief) on Tuesday, pricing a five year deal that was twice subscribed at the tight end of guidance. The transaction was almost exclusively bought by German investors, many of whom did not incur a capital charge, despite rating agency concerns over the limited data on the assets.

The Cover, EuroWeek’s sister publication devoted to the covered bond market, has changed the voting process for this year’s awards. Lead managers and issuers are required to pitch for the awards they wish to be shortlisted for.

The Australian regulator has set out its prudential standards for covered bonds, making some concessions to industry lobbying.

Sweden’s regulator wants to alter how issuers value cover pool assets and introduce regular collateral stress tests.

Australia’s Westpac returned to the dollar market this week, launching a dual tranche three year trade on Tuesday, which it priced with zero new issue premium, according to syndicate bankers off the deal.

New Irish insolvency legislation will benefit covered bonds over the long term, according to Moody’s. But as the new law will provide debt forgiveness for mortgage borrowers with unsustainable loans, it could hit Irish cover pools that boast a high percentage of negative equity loans.

Intesa Sanpaolo created two new mortgage backed jumbo covered bonds as part of an exchange offer open to public sector backed bondholders, who also voted to allow the issuer to amend its public sector documentation and make existing rating triggers less stringent.

NordLB launched the first ever aircraft Pfandbrief (Flugzeugpfandbrief) on Tuesday, pricing a twice oversubscribed five year deal at the tight end of guidance.

Münchener Hypothekenbank’s debut dollar benchmark surprised the market and astonished the issuer, which had only envisaged a small private placement. MuHyp’s next benchmark will be a euro trade after the summer break, but though it is not originating new dollar assets the borrower has not ruled out another public deal in that currency.

The short end of core and UK covered bonds are well supported after the European Central Bank (ECB) cut its deposit rate to 0% last week. Peripheral markets remain out of favour on an asset swap basis, but top tier names have outperformed their sovereign.

Münchener Hypothekenbank (MuHyp) will price its first benchmark dollar covered bond on Friday afternoon, launching the deal after receiving strong reverse enquiry from SSA and central bank buyers.

Issuance of Canadian covered bonds is set to slow as local borrowers wait for new legislation before returning to the capital markets. Treasury officials from Bank of Montreal, Toronto Dominion, Canadian Imperial Bank of Commerce and Royal Bank of Canada gathered at a roundtable event in Toronto in June to talk about prospective changes to the Canadian covered bond market and give their consideration to the possibility of SEC or 3(a)(2) registration.