Covered Bonds

More peripheral covered bonds are being mulled for launch in the coming week, but any further issuance by lower ranked credits will have to contend with a weakening of demand, as hinted at by sub-Eu1bn deals for Italy’s Banco Popolare and Spain’s Bankinter yesterday (Thursday). Meanwhile, Compagnie de Financement Foncier has completed a third foray into the US 144A market.

Banco Popolare and Bankinter are bookbuilding for new issues today (Tuesday) amid signs that investor appetite for second tier issuers from peripheral countries could be flagging after a busy two weeks, particularly from Spain.

Caja Madrid yesterday (Tuesday) priced the biggest Spanish benchmark covered bond since the segment’s reopening this autumn, and the issuer told The Cover that several aspects of the transaction were encouraging, including its resilience to weakening market conditions on the day.

Dexia Municipal Agency launched an offer to exchange Eu14.5bn of obligations foncières into three new, longer dated benchmarks today (Wednesday) in the first test of such liability management exercises in the covered bond market.

Nationwide Building Society priced its first benchmark covered bond in three years yesterday (Tuesday), a Eu1.25bn five year transaction that the issuer said lays a strong foundation for its future activity in the market.

Banco Popolare is lining up to launch what would be the fourth new Italian covered bond in 10 days, while the dollar market could be reopened today (Wednesday).

The Senate Committee on Banking, Housing & Urban Affairs will hold a first hearing on covered bonds next Wednesday (15 September).

Caja Madrid launched a March 2013 cédulas issue into a crowded market this (Tuesday) morning, a week before its merger with six other Spanish banks is due to be approved, while Nationwide Building Society met with healthy demand for a five year issue launched this morning that will be sized at Eu1.25bn.