Covered Bonds

Source: Dealogic. Data includes jumbo issues in euros and $1bn minimum issues in dollars; excludes retained deals under Dealogic criteria.

The benchmark covered bond market is set to experience a welcome slowdown this week, with Abbey National the only issuer widely expected to launch a deal as others busy themselves with the preparatory work of meeting with investors.

The UK Financial Services Authority said last week that respondents to a discussion paper on the Turner Review underestimated the risks posed by asset encumbrance, a topic it addressed when changing its policy on covered bond issuance last October. The FSA also discussed the potential for international co-ordination among regulators.

Fitch today (Monday) downgraded Norwich & Peterborough Building Society’s long term issuer default rating from A- to BBB+, on stable outlook. The rating agency affirmed the building society’s mortgage-backed covered bonds at AAA.

Banca Popolare di Milano returned to the market yesterday (Thursday) with its second benchmark covered bond, fulfilling a promise to investors to come to the market once a year with a deal of up to Eu1bn, the issuer told The Cover. Meanwhile Banca Carige is understood to have awarded the mandate for what could be the next Italian covered bond and would be its debut public issue.

An additional Eu229m of covered bond purchases have settled to take the running total under the European Central Bank’s scheme to Eu15.429bn today (Friday), with around 40% of this total accounted for by settled purchases reported in September.

If last year’s awards dinner was all about rearranging the deckchairs on the Titanic, this year it was rearranging the dining chairs in the Koncertsal. The event can nevertheless be declared a clear success given that more than two weeks after the dinner, none of this year’s winners have had to be bailed out. But there is, of course, a hair in this soup.

Banca Popolare di Milano will price a Eu1bn seven year issue of obbligazioni bancarie garantite, launched this (Thursday) morning, at the tight end of guidance. The deal takes the number of new benchmarks launched this week to eight, a record for the covered bond market. Meanwhile Intesa Sanpaolo has retained a new issue off its public sector programme.

Danske Bank priced a Eu1.25bn six year covered bond in the middle of guidance of the 45bp over area yesterday (Wednesday). A tighter trade would have been possible, said a syndicate official at one of the leads, but with a slightly weaker tone to the market the leads did not want to jeopardise the issue’s chances of performing in the secondary market.

Settled covered bond purchases under the European Central Bank’s programme rose by Eu241m to reach Eu15.2bn this (Thursday) morning.