Covered Bonds

JP Morgan is once again buying primary market ABS in size, taking Eu1bn of Aegon’s new Dutch prime RMBS deal Saecure 10.

The Netherlands NIBC Bank brought primary market activity to a close this week, launching an inaugural Eu500m three-year deal on Friday via leads LBBW, Natixis, and RBS, which priced the new issue at 105bp over mid swaps.

Lloyds Banking Group finally closed its Headingley static pool RMBS during Australian hours this morning — a challenging aspect of being the first UK RMBS to place an Australian dollar tranche. Final levels were largely in line with Wednesday’s guidance, with the A3 notes at the tight end.

Northern Rock has been trying to play down the significance of its first public post-crisis securitisation, a £1.5bn prime RMBS. The bank was at pains to point out that it was only publically placing 2% of its balance sheet, in the form of an ‘A1’ tranche of 1.99 year average life notes.

Spanish and UK covered bonds offer the highest relative value, said analysts at the 4th annual IMN global covered bond conference, in London, on Thursday. At a research analysts’ roundtable, participants were asked to select jurisdictions where the relative value of covered bonds was highest.

The debate about transparency in covered bonds continues to rage and proved an enduring theme across a a number of panels at the 4th annual IMN covered bond conference in London, on Thursday.

Covered bonds have had a remarkable year. Blessed by favourable regulation the market has blossomed like never before — with over Eu80bn already issued so far in 2011. But, just as the euphoric love affair was starting to blind people’s perceptions of covered bonds, a sophisticated and large UK investor has warned that some deals are simply impossible to analyse.

Royal Bank of Canada issued its debut Swiss franc covered bond on Thursday — a Sfr150m 10 year trade offering a 2.25% coupon. Sole bookrunner Credit Suisse opened the books at 9.30am Swiss time and closed them at 3.30pm.

The decoupling of Spain from its troubled neighbour Portugal appeared even starker this week as Spanish banks happily tapped funding while Portugal’s budget showdown still loomed.

Axa Bank Europe sold its second ever covered bond on Tuesday, a Eu500m five year deal which, along with other covered deals this week, was notable for its aggressive pricing.

Banco Bilbao Vizcaya Argentaria priced the lowest yielding covered bond from a Spanish issuer in the last year on Monday, while Banco Espanol de Crédito sold a Eu600m issue off the back of one of the borrower’s largest ever order books.

Caja Madrid was the third Spanish name to tap the covered market this week, though it did not enjoy the tight pricing of its compatriots. The bank’s Eu750m three year cédulas hipotecárias came in the wake of twin Spanish deals from Banesto and BBVA on Monday, which were priced well inside initial guidance.