Covered Bonds

Moody’s published the presale report for the covered bonds of ANZ National Bank (rated Aa3/Prime-1) on Friday, assigning the bonds a Triple A rating. The deal is backed by prime NZ mortgages with a conservatively low 54% weighted average LTV. The programme also benefits from a number of commonly used structural features designed to mitigate potential payment shortfalls.

Despite a high unindexed WA-LTV and the inclusion of non standard mortgage loans, Moody's says ING DiBA's collateral pool is better than average. The borrower is expected to issue its inaugural pfandbrief soon.

The covered bond market’s enduring capacity to provide reliable bank finance in size and duration was highlighted this week as six borrowers collectively raised the equivalent of Eu5.5bn on the back of 370 investor orders worth Eu8.5bn.

As a proxy for national mortgage markets, LBBW research has taken a closer look European mortgage pool statistics and macro-economic housing market trends. Controversially, it finds that Spanish NPLs have halved in the last two years. In contrast Scandinavia, which is stereotyped as safer than safe, could be heading for trouble as house prices reach 30-year highs.

French issuers were once again front and centre in a busy week for covered bonds, as BNP Paribas and Crédit Agricole launched benchmark deals into a ready market.

UniCredit’s German entity HVB on Tuesday issued its first benchmark Pfandbrief since January. The Eu1bn five year deal benefited from an enduring safe haven bid and investors’ confidence that, despite its headquarters in a peripheral European country, it remains a German name with the advantages that status bestows.

The covered bond market’s enduring capacity to provide reliable bank finance in size and duration was highlighted this week as six borrowers collectively raised the equivalent of Eu5.5bn on the back of 370 investor orders worth Eu8.5bn.

BNP Paribas priced its first public sector covered bond of the year on Tuesday, a well executed five year benchmark. The Eu1bn no grow trade was well oversubscribed, more bonds were placed with Asian accounts than domestic buyers, which a syndicate lead suggested was a first for French covered bonds.

Fitch has downgraded covered bonds issued by Marfin Popular Bank from BBB+ to BBB and kept them on rating watch negative, following a downgrade of the issuer’s default rating on June 1.

Sweden’s Länsförsäkringar Hypotek (LF Hypotek) has finished roadshowing and will come to market early next week. After a successful euro covered bond debut in March last year, the borrower should benefit from some market familiarity and heightened demand for core paper.

After the activity and drama of the first part of the week, Ascension Day holidays across most of Europe have lent a quiet tone to the market and a more sedate close is anticipated. But with as many as five deals mandated and a few others rumoured, the pace is likely to pick up next week.