Covered Bonds

Spanish covered bond issuance is being mulled by market participants, with supply away from France and Germany this week having offered encouraging signs that the market is open to a broader range of jurisdictions than in the past month. Meanwhile Caisse de Refinancement de l’Habitat tapped the market as other French issuers updated prospectuses in response to a tax change.

A period of instability brought on by mounting concerns about peripheral sovereigns meant that Banco Popolare had to wait more than three weeks to launch a deal after embarking on a roadshow, but the issuer was rewarded with an oversubscribed order book and strong support from real money accounts. Meanwhile Caisse de Refinancement de l’Habitat has launched two taps.

Banco Popolare has priced a Eu1bn seven year issue that is the first Italian benchmark covered bond of the year and the first from a southern European jurisdiction since concerns about peripheral sovereigns’ finances flared up.

Fitch has downgraded the covered bonds of National Bank of Greece, Alpha Bank and Margin Egnatia Bank because it expects a deterioration of Greece’s public finances will make it more difficult to sell or refinance cover pool assets in the event of an issuer default.

Moody’s has lowered SNS Bank’s senior debt rating because of a significant worsening of the bank’s asset quality and as a result of high impairments largely stemming from investment management and project finance activities of its SNS Property Finance arm.

A Eu1bn 12 year Barclays Bank issue yesterday (Tuesday) met with strong demand from insurance companies and asset managers attracted to its 4.25% coupon, according to bankers at the leads, with pricing fortunately coming ahead of a fall in absolute yields.

London

Barclays Bank will today (Tuesday) price the first benchmark covered bond launched outside France and Germany in nearly a month after building an oversubscribed order book for a Eu1bn 12 year issue.

The European Central Bank is understood to be moving towards lending out covered bonds it has purchased under its Eu60bn programme to help improve secondary market liquidity.

WestLB took advantage of positive momentum in the covered bond market to price the fourth benchmark of the week last Friday, and bankers today (Monday) said that it remains open to new issues.