Covered Bonds

Primary activity in the European covered bond market focused on France on Tuesday after BPCE said it would tap its 10 year. There was a mixed reception to the news amid fears that OAT underperformance would hit demand, but bankers countered that investors were desperately searching for yield.

Deutsche Bank is marketing a US dollar denominated deal for Ba1 rated Global Bank in Panama. The transaction is expected to be structured and does not benefit from a legal framework or special regulatory oversight.

Dexia Kommunalbank Deutschland (DKD) on Monday announced it will buy back up to €3bn in public sector backed Pfandbriefe across 10 outstanding trades.

A template for covered bond credit default swaps should be launched in the next few weeks, according to a person with knowledge of the initiative. Some syndicate bankers were sceptical of the need for added protection on covered bonds, given their dual recourse structure and inherent risk profile. Others, however, felt that with a paradigm shift in risk perception since the start of the financial crisis, the time could be right to offer buyers an extra layer of security on an increasingly important product.

Berlin Hannoversche Hypothekenbank (Berlin Hyp) will issue a jumbo mortgage Pfandbrief in the summer, after a tender of four public sector backed trades that will help support an increase in the overcollateralisation of its mortgage cover pool, the issuer told The Cover.

Denmark’s Nykredit Realkredit will launch a new mortgage funding model this quarter, in an attempt to lower its covered bond issuance costs in an environment of falling house prices.

Bank Austria launched UniCredit Group’s first covered bond since October 2011 on Wednesday, and the second public sector backed benchmark in as many days.

Ravenous investors tossed aside their yield targets to pile into a stellar 10 year covered bond from Commonwealth Bank of Australia on Wednesday. The issuer increased its deal size to print a €1.5bn jumbo off a €4.5bn order book.

Landesbank Hessen-Thüringen (Helaba) broke ranks with cautious covered bond issuers on Tuesday to launch the first euro benchmark trade for two weeks, the first jumbo Pfandbrief since August 2011, and the tightest euro covered bond of 2012.

Primary supply slowed on Thursday as poor peripheral data helped increase volatility, though the market has €3bn in successful benchmark supply to digest. Berlin Hannoversche Hypothekenbank Aktiengesellschaft (Berlin Hyp) announced a tender of four public sector backed Pfandbrief trades, following a well received public sector backed deal from UniCredit Bank Austria.

Ravenous investors tossed aside their yield targets to pile into a stellar 10 year trade from Commonwealth Bank of Australia. The issuer increased its deal size to print a €1.5bn jumbo off a €4.5bn order book, making Australia the second most prolific jurisdiction of 2012, according to covered bond analysts.

Commonwealth Bank of Australia came to market with its second euro benchmark of the year on Wednesday. The 10 year trade drew huge demand, allowing leads to print a €1.5bn deal an exceptional 11bp inside of initial price thoughts.