Covered Bonds
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Compagnie de Financement Foncier’s Eu500m 18 month obligations foncières issued on Friday was in keeping with the low profile it has maintained in the public markets this year. The Cover spoke to CFF about the rationale for the trade and how it fits in with the issuer’s overall strategy.
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Caja de Ahorros del Mediterráneo continued the Spanish march to increasingly wide levels when it priced its debut Eu1bn two year cédulas on Friday afternoon. Despite claims last week that this was damaging the wider market, one lead manager robustly defended the pricing, saying it should have no impact on core names.
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Germany on the wrong end of a drubbing and praising the English authorities – surely this can’t be the covered bond market? Of course not! It’s Euro 2008. But we won’t let that get in the way of a good (or bad) joke at their expense.
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Compagnie de Financement Foncier kept its ambitions modest this (Friday) morning in the tough market, going out with an 18 month obligations foncières issue at mid-swaps flat that could be limited to Eu500m.
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Banca Popolare di Milano could launch the first issue under the Italian covered bond framework this month, with its roadshow due to kick off late next week. The bank has also finalised its choice of lead managers.
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Caja de Ahorros del Mediterráneo looked to be taking the record covered bond benchmark spread 7bp wider this (Friday) morning with guidance of 80bp over mid-swaps for a two year cédulas just two days after Banco Pastor priced its Eu1bn two year at 73bp over. But while the pricing was seen as necessary for the deal to get done, it caused dismay in the wider market where other potential issuers have been finding soft-sounding frustrating.
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Spain’s Banco Pastor successfully priced a new Eu1bn two year cédulas hipotecarias at the widest ever level for a publicly offered covered bond, with one lead manager saying this was simply the level investors would buy at, and that market volatility meant that even comparing new issues to bonds launched as recently as May was fruitless.