Covered Bonds

Nomura has hired a new covered bond syndicate banker, The Cover can reveal.

Delta Lloyd’s Arena 2011-1, the first European ABS deal of the year, priced at the tight end of guidance on Friday, signalling that the market is ready for more Dutch prime.

Market reaction to The Reserve Bank of New Zealand’s announcement that a regulatory limit will be applied to the issuance of covered bonds by domestic banks has been positive. Some market participants however say its stance is too conservative, and does not take into account the benefits of covered bonds in terms of market access and funding costs.

The covered bond primary market has ground to a halt as players look to the upcoming EFSF issue, which is due to price Tuesday. Once that’s out of the way there are high hopes the market will rebound, particularly for Spanish bonds which have performed well recently.

Crédit Agricole has recently been on a hiring spree in the covered bond and SSA space.

Rating: Aaa/AAA/AAA

A clutch of issuers from outside Europe leapt into the covered bond market across a range of currencies this past week in what was a spectacular display of a sector that is becoming increasingly global.

French issuance continues unabated with Banques Populaires launching its first, and Crédit Agricole its second, covered bond of the year yesterday (Thursday). Both went well, but the sheer size of the order book for Crédit Agricole’s deal surprised many –being the largest so far this year.

UBI Banca joined Intesa Sanpaolo at the long end of the curve in a benchmark deal that leads said would help breed confidence for other mid sized Italian banks to tap the covered bond market.

HSH Nordbank’s issued 3-1/2 year Pfandbrief on Thursday which, despite competing with other deals in the same part of the curve, benefitted from robust demand from local savings banks, attracting a reasonable oversubscription from these quality buyers.

The UK’s Nationwide Building Society today priced a groundbreaking 15-year covered bond which, for the first time, has attracted UK insurance company demand on a scale that was, until recently, not imaginable. Recent changes to Solvency II, a significant back up in spreads and several other factors have forced these buyers to look at the product with a fresh set of eyes. And where Nationwide has trailed –others are sure to follow.