Credit investors less sensitive to relative value

The strength of demand for Tuesday’s covered bond deals illustrates that the market continues to benefit from, not just traditional interest, but also wider credit investor participation. This much was already known but what is perhaps more interesting is that relative value to senior unsecured now seems to be less important. This is good news for the covered market, but it is not likely to be welcomed by the FIG sector as a whole as it implies continued cannibalisation of the two markets.