Covered Bonds
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Germany’s NordLB opened the books on a new five year benchmark sized public sector Pfandbrief this morning, and has been rewarded for keeping to the rough timetable it suggested last week.
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“Spring being a tough act to follow, God created June,” quipped American boxing analyst Al Bernstein, and June will have a tough task repeating May’s Eu20bn of new issues. Market participants were confident that last Month’s pace could be maintained, although they were encouraged by redemption levels rather than divine providence. Meanwhile there were further hints of growing supply in the UK as another building society registered its programme.
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In brief: Deutsche Apotheker und Ärztebank has mandated Barclays Capital, DZ Bank, JP Morgan and Landesbank Baden-Württemberg for its debut jumbo covered bond.
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Danske Bank was unfazed by volatility in the Swiss franc market this week and priced a Sfr275m (Eu169m) seven year covered bond on Wednesday, its debut in the currency. Meanwhile, Erste Europäische Pfandbrief- und Kommunalkreditbank priced what was an unusually short maturity.
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After a week in which the variety of French structures was highlighted, The Cover spoke to Véronique Hugues, head of long term funding at Dexia Municipal Agency, about what the country’s issuers have in common and what differentiates them.
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ING achieved the largest size of the week when it priced its second covered bond yesterday (Thursday) afternoon. The issuer said the eye-catching 50bp over mid-swaps spread was a price worth paying given the depth of demand it attracted.
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Société Générale’s debut obligations foncières issue is set to be priced at the low end of expectations in terms of size and price early this (Friday) afternoon. But while market participants cited doubts over the structure as an impediment to the deal’s acceptance, one banker involved said that the pricing vindicated SG’s strategy.
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Crédit Mutuel-CIC could breach the Eu1bn threshold that has proved a sticking point for many recent deals with its new two year covered bond priced yesterday (Thursday), despite coming in the midst of other French supply
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Dexia Municipal Agency priced a new Eu1.25bn three year obligations foncières (OF) issue yesterday afternoon, enjoying strong interest from eastern European central banks and Asia.