Covered Bonds

Lead managers JP Morgan and Natixis priced Veneto Banca’s Claris RMBS 2011 on Thursday but while the A1 tranche was sold at the initial guidance, the A2 tranche required a wider price to clear.

Skipton Building Society’s Darrowby No. 1 is set to be the next UK prime RMBS deal to hit the market, with JP Morgan and Royal Bank of Scotland running a roadshow in London on Thursday and Friday.

Activity in the US market looks set to improve over the next few weeks with two Scandinavians and an inaugural deal from a Canadian issuer lining up.

Royal Bank of Scotland priced its second euro-denominated covered bond of the year on Tuesday, a transaction notable for its granular book and the tight pricing relative to where the borrower could fund itself in the senior unsecured market.

Italy’s Banco Popolare and Banca Monte dei Paschi di Siena this week took advantage of a bid for peripheral risk, raising Eu2.5bn of five year funding on the back of collective demand of Eu3.1bn spread over nearly 200 orders.

Spain’s La Caixa and Unicaja raised Eu1.75bn of funding on Tuesday and Wednesday, getting their deals away before Moody’s surprised the market when it downgraded the country on Thursday morning, earlier than expected.

The Australian government could double a provisionally indicated cap on covered bond issuance from the 5% of an issuer’s assets, originally mooted in December last year, to 10%. A formal decision will not be taken until autumn, when draft legislation on the Banking Act is due to be published.

CM-CIC needed little preparation or marketing to price a Eu1.5bn 4.375% March 2021 on Tuesday via joint leads BNP Paribas, Natixis and Royal Bank of Scotland.

After little more than a few weeks at Amias Berman & Co, Tim Skeet is rumoured to be off to pastures new. Though nothing is officially confirmed, there is speculation that the covered bond stalwart has been hired by RBS. For Skeet this is likely to be a bit like returning home – he used to work with much the same crowd when they were at ABN Amro, prior to its acquisition by the Scottish bank.

Fitch has downgraded 50 classes of multi-issuer cédulas hipotecarias in 46 transactions and Moody’s has downgraded the Spanish sovereign. Despite this, the secondary market has only seen slightly better offers come in for selective cédulas deals and national champions remain well supported — suggesting this much was already priced in.

Banca MPS got a modest reception for its 5.5 year and Unicaja just managed to get over the finishing line with a lot of help from the domestic buying base, as the primary market slowed after a busy mid-week. CIBC is lining up in Australian dollars and at least two mandates from core jurisdictions are expected to be announced on Friday.

Fitch Ratings said in a report published today that covered bonds are beneficial to a bank’s creditworthiness and, by extension, to its unsecured creditors. Fitch said it does “not view over-dependence on covered bonds as a risk for many banking groups.”