Covered Bonds

The European Central Bank disclosed a Eu238m increase in settled covered bond purchases this (Monday) morning, the beginning of the twelfth full calendar week of reporting of buying under the scheme.

Barclays Bank will tomorrow (Tuesday) launch the first benchmark UK covered bond since November 2007 and the first since the Regulated Covered Bond regime came into effect, a 10 year deal that is expected to be at least Eu2bn and at price talk tighter than that heard last week. The deal will hit another frenzied week for covered bonds, with at least two further issues likely in the coming days on top of three today (Monday), and more new names in the pipeline.

A selection of photos of the winners at the EuroWeek and The Cover Covered Bond Awards dinner in Copenhagen on 17 September.

Representatives of Italy’s leading issuers and investors discuss the potential for obbligazioni bancarie garantite in this roundtable discussion sponsored by UniCredit, exploring issues such as credit quality, the prospective investor base, and pricing considerations.

UBS made an impressive debut in the covered bond market this (Monday) morning, gathering over Eu7bn of orders. Unicaja also got off to a strong start in the asset class with its inaugural issue, while Swedbank Mortgage will price a larger than expected deal, even if bookbuilding was the slowest of the morning’s deals.

Caja Madrid yesterday (Thursday) priced the biggest Spanish covered bond issue since May 2008, but one that, according to a syndicate official at one of the leads, prudently balanced size and price.

Standard & Poor’s downgraded NIBC Bank from BBB+ to BBB yesterday (Thursday) because of an increased likelihood that the bank will report a loss for 2009, with asset quality deteriorating and pressure on net interest income.

A Eu470m increase in settled purchases under the European Central Bank’s Eu60bn programme took its daily average buying to the highest level in a month today (Friday), in spite of fears that the scheme is playing a major part in inflating covered bond prices to what some market participants have called dangerous levels.

Covered bonds made a comeback in the Swiss franc market this week, as investors reached for a highly rated asset class that, unlike other triple-A product, still offers a spread above mid-swaps.

Stadshypotek yesterday (Thursday) priced a Eu1.5bn five year covered bond, the first new issue launched since the European Central Bank’s purchase programme started that is not eligible for the scheme. But the issuer’s strong credit and cover pool gave it confidence that this would not be a worry for the transaction, it told The Cover. And the Swedish deal already has a successor, with Swedbank Mortgage lined up to launch a seven year issue early next week.

In this roundtable discussion, sponsored by Danske Bank and Nykredit, leading market participants – including issuers, investors and the Danish central bank – examine how Denmark has coped through the crisis and what the future holds for the country’s covered bond market.

UBS has been fielding questions from investors on the roadshow for the first Swiss covered bond programme. The syndicate for the upcoming inaugural euro denominated transaction was announced yesterday (Thursday) and The Cover spoke to the issuer about the rationale for its entrance into the market, the structure of its programme, and Swiss collateral.