Americas

A large outflow of Chinese money would send stock markets and real estate prices in the US soaring

Leaders in emerging market countries wonder whether the world’s confidence in the US’s creditworthiness is misplaced

A top Chinese diplomat wants the BRICS to create a secretariat in order to make the group more efficient

As the deadline for raising the US debt ceiling approaches, market experts become more worried

Countries must resist calls to protect their domestic systems from financial reform

Royal Bank of Canada sealed its place as a truly global issuer when it returned to the dollar market for the second time in three months to raise $2bn of five year funding, its longest SEC registered deal in the currency so far. This was its fourth benchmark covered bond deal of 2013, making it by far the most prolific borrower with the broadest global reach.

Royal Bank of Canada’s recent €2bn seven year covered bond came in for criticism because its final spread of 16bp was deemed too far away from the initial price thoughts that are supposed to help investors make a decision on the relative value of a trade. If they commit to buy with an indication of interest, issuers should have the decency to make sure that the final spread comes reasonably close to the starting point.

Canadian Imperial Bank of Commerce attracted a very well oversubscribed book for its inaugural Canada Housing Mortgage Corporation registered covered bond. It opted for €1bn — only half the size of Royal Bank of Canada’s recent euro issue — but its needs are much smaller and it funded tighter than where it could have in US dollars, the leads said.

Royal Bank of Canada has issued the first Australian dollar benchmark of 2013, pricing the three year floating rate deal at the tight end of guidance. The depth of demand and the competitive funding cost could tempt other covered bond issuers to look at the Australian market.

Proposed US legislation, which would protect covered bondholders from losses if a bank fails, is credit positive, Moody’s said this week. However, the law change is unlikely, as it is embedded within controversial plans to reform the US housing market, which may take years to enact, the rating agency added.

Not content with pricing the first regulated Canadian covered bond in euros and the first regulated benchmark in US dollars, the Royal Bank of Canada is now marketing its first Australian dollar covered bond benchmark.

Core European covered bonds were supported on Thursday despite recent downgrades. But weaker Spanish names were under pressure on concerns that the European Central Bank could be poised to reconsider the repo treatment of covered bonds relative to ABS. Meanwhile, primary hopes were hit after it emerged that programme documentation delays could cause Canadian Imperial Bank of Commerce (CIBC) to launch its benchmark in September rather than next week.