Covered Bonds

BNP Paribas sold a Sfr275m (Eu183m) September 2014 covered bond yesterday (Monday) at a spread of 75bp over mid-swaps, the tight end of 75bp-80bp guidance. It was the first public mortgage-backed covered bond in the Swiss franc foreign market since September and the largest in over a year.

Compagnie de Financement Foncier has closed books on the longest dated covered bond since July 2007, a 12 year obligations foncières benchmark via HSBC, Natixis and Société Générale.

Santander’s Eu1.5bn five year cédulas hipotecarias yesterday (Monday) was the first jumbo since late March and covered bond bankers are hopeful that there will now be further supply given that, with spreads tighter post-ECB, issuers will now be ready to pay the price necessary to tap into buoyant demand for spread product.

Fitch yesterday (Monday) downgraded Komerční Banka, a Czech subsidiary of Société Générale that issues covered bonds.

In brief: Compagnie de Financement Foncier is launching a 12 year obligations foncières issue this (Tuesday) morning, the longest dated covered bond benchmark since the crisis struck.

Fitch yesterday (Monday) downgraded Société Générale’s covered bond issuing arm, SG Société de Crédit Foncier.

Fitch today (Monday) downgraded Société Générale from AA- to A+ due to concerns about the bank’s profitability, in particular in the investment banking division.

Kookmin’s peers have been coy about the possibility of launching a follow-up to the first Asian covered bond, but bankers are speculating that the strong performance of the $1bn deal could make this more likely.

Coventry Building Society has restructured its covered bond programme to introduce a partial pass-through structure. The move was rewarded by Fitch and Moody’s on Friday, when the rating agencies affirmed the building society’s covered bonds at AAA, thereby assuring it continued eligibility for the Bank of England’s Special Liquidity Scheme.