The weak market has scuppered the chances of any deals from periphery banks that completed roadshows earlier this month. Standard & Poor's highlighted their plight by downgrading Banco Popular Espanol on Tuesday.
In covered bonds there has been some movement in and out of the pipeline. Two inaugural French issuers, both fully state-owned, are preparing deals. However, with markets still volatile, one Austrian issuer has postponed its marketing.
Caisse Française de Financement Local (Caffil) began roadshowing its inaugural public sector covered bond this week through Barclays, BNP Paribas, Deutsche Bank, Natixis and HSBC.
Meanwhile, La Banque Postale mandated Natixis and UniCredit to organise investor meetings in Europe from July 4 to 7. An inaugural residential mortgage-backed covered may follow, subject to market conditions.
However, with sovereign bond yields rising, covered bond spreads have widened. One leading covered bond investor said markets were prematurely pricing in a rate hike.
Due to the volatility, Raiffeisenlandesbank Niederösterreich-Wien postponed a roadshow that was scheduled to start on June 27, though it still plans to return at some point.
There are hopes that by July the market will have stabilised and by then investors should have cash to put to work.
Plenty of issuers are planning capital trades, said bankers, but few have announced mandates. Aviva wraps up a roadshow on Wednesday for a potential dated subordinated instrument in euros, and CNP Assurances is yet to hit the market after it completed a sub roadshow on June 14.
ABS ignores volatility
ABS supply has continued this week, despite the volatility. Volkswagen Bank, one of the most frequent ABS issuers, will have no problem getting its Driver 11 German car loan securitization away, bankers said. Leads went out with guidance on Wednesday morning of 30bp-35bp area for the class As and 80bp area for the class Bs, which reflects spread widening in recent weeks. The class As in VW’s other deals this year were priced at 25bp over.
Meanwhile, Leeds Building Society is lining up a debut issue from its Albion RMBS shelf in what will be only the fourth UK RMBS issue this year. The borrower will meet investors in the UK on Thursday and Friday, and is aiming for a deal next week.
Royal Bank of Scotland’s Irish subsidiary Ulster Bank bought back €1.5bn of Celtic Residential Irish Mortgage Securitization bonds in its recent buyback. The bank received offers from investors totalling around €2bn.
Will Caiger-Smith, bank finance editor, +44 207 779 7323
Bill Thornhill, covered bonds editor, +44 207 779 7325
Tom Porter, bank finance reporter, +44 207 779 7324
Joe McDevitt, ABS reporter, +44 207 779 7334
Hugh Leask, secured finance reporter, +44 207 779 1788
Top bank finance stories this week:
Leeds Building Society preps Albion RMBS against difficult backdrop
VW readies second Driver ABS this year
BPE downgrade underlines periphery plight
Fast money still driving FIG market nerves
Aviva hopes for window with sub roadshow