Covered Bonds
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The European covered bond market needs to reinstate a liquid segment at its core as a means of spurring standardisation, which would make the asset class more attractive and broaden its investor base, Michel Stubbe, head of the markets operations analysis division at the European Central Bank, told The Cover. He stressed that his views do not necessarily reflect the policies of the ECB.
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A positive reception for Erste Group’s inaugural public sector benchmark covered bond demonstrated that perceptions of Austrian credit have moved on after a period of negative headlines, a syndicate official at one of the leads told The Cover. Meanwhile, Dexia wrapped up its forth benchmark covered bond of the year.
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SNS Bank and Aktia Real Estate Mortgage Bank have been in the market today (Wednesday), building books for new covered bond issues after the pricing of benchmarks for Dexia Kommunalbank Deutschland and Erste Bank yesterday (Tuesday).
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Fitch has updated its criteria for stressing interest rate risk in covered bonds, which may lead to a change in the level of supporting overcollateralisation (SOC) for a given covered bond rating, it said yesterday (Tuesday).
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Deals for Dexia Kommunalbank and Erste Group got the primary market off to a strong start this (Tuesday) morning, with both issues oversubscribed and executed swiftly. Further issuance is expected this week, with SNS Bank already sounding out a new issue.
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Jozef Prokeš, formerly senior portfolio manager at the National Bank of Slovakia, has joined Crédit Agricole CIB’s liquid bond trading department in London, where he will trade covered bonds alongside other asset classes.
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SNS Bank has mandated lead managers for a new covered bond that is expected this week, and several other issuers are said to be candidates for issuance in the coming days.
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The European Covered Bond Council is planning a consultation on post-trade price reporting after a meeting of its market related issues working group on Friday at which the European Central Bank called for greater price transparency despite resistance from some traders. The discussion is part of a wider debate about the positioning of the asset class.
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A new subsidiary of the Association of German Pfandbrief Banks, vdpResearch, has developed an index that tracks price developments of German owner-occupied housing. The index forms part of a real estate index family that vdpResearch plans to roll out in the coming year. -
The European Central Bank this week reported Eu1.000bn of covered bond purchases under its Eu60bn programme, the lowest week’s total since mid-January. Central bank interest in new issues has nevertheless been high.
