Covered Bonds

FIG investors shrugged off concerns about Spain’s fiscal stability this week, picking up five year paper from Santander in what was the first senior deal from a Spanish bank with a tenor outside the three year term of the ECB’s long term refinancing operation (LTRO) since the measure was introduced last December.

BNP Paribas made negative new issue premiums a reality this week, pricing a hugely oversubscribed 10 year covered bond through its outstanding curve on Thursday. The result underscored the rapid tightening in French spreads over recent months back towards their 2011 levels.

The year’s first euro benchmark from a Swedish issuer was rewarded with the largest ever order book for a Nordic covered bond this week. After Stadshypotek attracted around €4bn of demand on Wednesday, allowing it the tightest launch spread for a Swedish issuer in four years, analysts expect other names from the country to end their long absence from the currency soon.

DNB Boligkreditt’s €2bn 10 year covered bond on Tuesday showed yield-hungry investors’ willingness to give ground for the right name from the right jurisdiction, bankers said. The strength of demand allowed the issuer to price its jumbo well through a recent shorter offering and still leave appetite unsated.

Australia and New Zealand Banking Group looks set to become the third Australian borrower to issue in its domestic currency. ANZ has mandated leads for a four year dual tranche, fixed and floating rate benchmark. Westpac has issued its first deal denominated in Swiss Francs

BNP Paribas priced a heavily oversubscribed 10 year trade through its outstanding curve on Thursday, opening the door to a world of negative new issue premiums.

Senators Corker and Hagan filed an adjusted US Covered Bond Act as an amendment to the Senate version of the Jumpstart Our Business Startups Act (Jobs Act) on Wednesday — nearly a year after the Covered Bond Bill (HR 940) was introduced to the House of Representatives. By aligning the prospective legislation with SME lending and job creation, the Act may draw broader political support and several industry associations have backed the move.

Westpac’s New Zealand unit issued its inaugural Swiss franc deal on Wednesday, sustaining the flow of Australian banks issuing covered bonds under the country's new covered bond legislation, which was implemented last year and allows domestic banks to issue in foreign currencies.

Stadshypotek built the largest ever order book for a Nordic covered bond on Wednesday, with the year’s first euro benchmark from a Swedish issuer.

DNB Boligkreditt showed that, for the right name from the right jurisdiction, yield hungry investors will make concessions to get exposure. The strength of interest for its latest 10 year offering allowed it to push both spread and size, and still leave appetite unsated.

After a four week gestation period, Bankinter priced the first Spanish deal since February 22, and its first funding since January 2011. The transaction was remarkable, not just for its size and pricing, but particularly for its tenor — which at five years, was well beyond the LTRO supported three year point.