Americas

Canadian Imperial Bank of Commerce has priced its first deal after leaving blackout, and the first deal from the jurisdiction in over a month. Canadian banks are not exempt from offering larger premiums to ensure successful execution but continue to find strong support for their product in a market largely closed to European buyers.

Analysts warn of dim outlook for asset class as risk appetite falters

RBS braved a hostile market to price the second euro benchmark of the week on Wednesday. Strong domestic and offshore demand made up for a minimal German bid, ensuring a solid €750m print.

European covered bond markets continue to look in poor shape as the macro sovereign backdrop dramatically deteriorates. This suggests that Commonwealth Bank of Australia’s euro denominated benchmark is likely to remain on hold for the time being. But that should not delay Westpac, which is planning to open books on Thursday afternoon.

Australia and New Zealand Banking Group priced the first Australian covered bond on Tuesday, launching a benchmark dollar trade that attracted broad demand and a healthy level of oversubscription. Meanwhile RBS has opened books on the week’s second euro benchmark, though given the jurisdictions concerned CBPP2 remains unable to support the primary market.

A group of four US senators from both political parties has introduced US covered bond legislation into the Senate. Bi-partisan support from the upper house is highly encouraging, and though the Federal Deposit Insurance Corp still has issues with prospective legislation, broad Congressional support could still push the bill through.

In a world echoing with cries for tighter banking regulation, Canada risks strangling one of the most promising covered bond markets through overly stringent supervision.

While Westpac and Commonwealth Bank of Australia headed to the US on Monday to market debut covered bonds, ANZ has started meeting investors in Europe, after finishing a US roadshow last week.

Westpac and Commonwealth Bank of Australia (CBA) started US roadshows on Monday and will go into investor meetings with expected/provisional triple-A ratings secured for their programmes. All four Australian banks with covered bond programmes now have provisional triple-A ratings from Moody’s and Fitch. But National Australia Bank (NAB) is winning the race to issue Australia’s first covered bond, after completing its US and European roadshow last week and mandating for a dollar transaction on Friday.

The UK’s Co-operative bank has sidestepped European turmoil and swap costs by choosing to bring its inaugural 10 year transaction in sterling. After finishing a roadshow earlier in the week the issuer sold its debut benchmark at the tight end of guidance against an improved market backdrop, with an attractive new issue premium.

It is in neither China's nor the US’ best interest to continue bickering over currency

Activity has once again shifted into dollars, with European investors paralysed by a lack of detail on the upcoming ECB covered bond purchase programme and a resolution of the sovereign debt crisis. Meanwhile Canadian banks issue dollar deals with ease, and Australia’s big four could be swayed into taking the same route for their respective debuts, said syndicate officials.