Covered Bonds
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ASB, the New Zealand arm of Commonwealth Bank of Australia, has talked to the Reserve Bank of New Zealand about issuing covered bonds, after the central bank said that it would accept residential mortgaged backed securities as collateral in liquidity operations. [Updated to include attribution, amend quotes.]
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In brief: Pfandbriefzentrale der schweizerischen Kantonalbanken priced a dual tranche issue in the domestic Swiss franc market yesterday (Wednesday), raising Sfr550m.
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Reduced bank funding options, a growing reliance on retail deposits, and a frozen secondary real estate market. Sound familiar? No, it’s not the US, but Kazakhstan. But while covered bonds are coming to the fore in the States and being taken up in CIS countries such as the Ukraine, the market’s direction in Kazakhstan is less clear.
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With the tight end of the covered bond market having been opened by German and Swedish issuers over the past week, the question is now being asked whether names outside the so-called core jurisdictions will be able to access the market. What answers are being given are hardly encouraging.
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Münchener Hypothekenbank achieved sub-Libor pricing on a Eu1bn three year public sector Pfandbrief launched yesterday (Monday) morning, taking advantage of its rarity and careful approach to the market to score a tighter result than its peers.
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Issuers could this week see any plans for issuance frustrated by competition within the covered bond market and also from the senior unsecured market, with spreads coming under pressure from both quarters. However, that is not stopping a wide array of names seeking out the smallest opening and this week has already seen more supply attempted in the same buckets as last week.
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Bayerische Landesbank has priced a three year public sector Pfandbrief at 1bp over mid-swaps, the tight end of 1bp-2bp over guidance. Meanwhile Eurohypo completed up its Eu1bn deal and, according to the issuer, its expected benchmark mortgage Pfandbrief issuance for the year.