Covered Bonds

Nykredit Realkredit found a strong reception among safety-conscious credit buyers for a rare euro benchmark junior covered bond on Wednesday.

Pfandbrief-starved domestic accounts and international buyers fleeing to quality devoured a trio of German euro benchmark covered bonds this week.

The prospect of wind farms backing covered bonds emerged this week in a discussion paper from the Climate Bonds Initiative.

Royal Bank of Canada is to take covered bonds into the US mainstream with the product’s first SEC-registered public offering, writes Bill Thornhill.

Bankers on Friday said Belgian lenders could be forced into the senior unsecured market for funding if the introduction of covered bond legislation was delayed. Markets expectations were that the legislation would be in place in the third quarter of the year, but now bankers fear that this could slip.

Pfanbrief starved German accounts and international buyers fleeing to quality fell upon dual €500m no grow deals from Landesbank Baden-Württemberg (LBBW) and Deutsche Pfandbriefbank (pbb) on Thursday. A collective €3.4bn in orders across the two trades allowed negative and non-existent premiums respectively, with LBBW’s deal boasting the tightest spread for a euro covered bond benchmark in over a year.

The US dollar denominated covered bond market will open up to all investors thanks to a new tradable index being launched by BNP Paribas and ProShares(R), an ETF provider. The new COBO index allows all investors, including retail, to trade the BNP Paribas Diversified USD Covered Bond Index, which matches all outstanding 144a US dollar covered bond deals.

Funding officials at French mortgage lender 3CIF have told The Cover they had no choice but to keep investors in the dark regarding the suspension of trading in the firm's debt from Euronext and the Luxembourg stock exchange just over two weeks ago.

Funding officials at French mortgage lender 3CIF have told EuroWeek they had no choice but to keep investors in the dark regarding the suspension of trading in the firm's debt from Euronext and the Luxembourg stock exchange just over two weeks ago.

During the crisis, the Nordic covered bond market firmly established its credentials as an anchor of stability, with spreads holding firm and borrowers maintaining their access to the market. Since then, continued strong demand for exposure to the region has supported a further narrowing of spreads relative to other core European covered bonds. In the EuroWeek/Natixis Nordic covered bond roundtable, a number of leading issuers from the region discussed the underlying reasons for this strength, and the outlook for the market.

Nykredit Realkredit will price a €500m five year junior covered bond at 200bp on Wednesday afternoon. The deal came far closer to senior than covered bond levels, with demand mainly from credit buyers in Nordic regions more familiar with the unusual structure.

Europe’s peripheral covered bond markets are looking over their shoulders after Fitch downgraded Banco Popular Portugal’s covered bonds on Wednesday. This followed downgrades of Greek and Cypriot covered bonds which have left their issuers unable to access emergency ECB repo funding.