Covered Bonds

UniCredit is set to price its first Italian covered bond issue well inside expectations this (Monday) afternoon after having generated strong demand for its obbligazioni bancarie garantite (OBG).

Société Générale SCF leveraged off attractive pricing and a Eu1bn maximum size to build a Eu4bn book for a seven year jumbo and fix pricing inside guidance this (Friday) morning. But the execution disappointed some investors, who likened it to practices in the corporate bond market.

Hypo Alpe-Adria is understood to be willing to structurally enhance its covered bond programme to preserve its Aaa rating, said Moody’s yesterday (Thursday).

Eurohypo yesterday (Thursday) issued the first 10 year jumbo Pfandbrief this year, a Eu1.5bn mortgage-backed deal that was priced at 70bp over mid-swaps. The level is “extremely tight”, the issuer told The Cover.

Moody’s today (Friday) confirmed the Baa2 rating of Mortgage & Land Bank of Latvia’s mortgage-backed covered bonds.

That all of this week’s jumbo covered bonds were in maturities of seven years or longer suggests that the market has little reason to worry, in the short term at least, if European Central Bank governing council member Ewald Nowotny’s five year maturity limit for the Eu60bn purchase programme turns out to be true. Market participants have even begun discussing the possibility of a longer dated covered bond than this week’s 15 year for Dexia Municipal Agency.

Danske Bank priced its first benchmark covered bond in a year yesterday (Wednesday) after adding Swedish mortgages as collateral to its international cover pool and a day after selling $5bn (Eu3.56bn) of government-guaranteed paper.

Dexia Municipal Agency yesterday (Wednesday) priced a Eu2bn 15 year public sector obligations foncières, the longest dated jumbo to come to market since July 2007. The issuer told The Cover that with the funding it has raised so far it can now head into the summer break in a confident frame of mind, although it might be back in the autumn.

Eurohypo will today (Thursday) price a 10 year mortgage-backed Pfandbrief 10bp tighter than a seven year deal that it sold just five weeks ago.

Fitch yesterday (Wednesday) kept the AAA rating of Newcastle Building Society’s covered bonds on negative review, and affirmed Skipton Building Society’s covered bonds at AAA.

GE Money Bank France is preparing a roadshow that will start next week for a new obligations foncières programme backed by French home loans.

Dexia Municipal Agency adopted a cautious approach when launching the first 15 year covered bond benchmark since July 2007 [corrected from 1997] this (Wednesday) morning, but ended up with a comfortably oversubscribed order book and a deal much larger than its early minimum target.