Correction needed to sustain covered bonds

Four out of five of this week’s covered bond trades were only just subscribed and, of the 20 issued so far this month, nearly 50% of them scraped through bookbuilding. Even though conditions look increasingly unreceptive to further supply, issuers that still have funding needs would rather move sooner than later as they fear spreads and yields will go higher as a result of the recent glut of supply.