A sharp fall in Bund yields and swap rates has heightened the search for better returns. Bankers have been quick to tout covered bonds that pay a spread above mid-swaps as the answer to rates investors' troubles.
10 year Bund yields were trading at their all-time record low of minus 17bp on Thursday and 10 year swaps were at 36bp.
That put spreads on many core European covered bonds — from Germany, France and the Nordic region — through mid-swaps. That made them "not particularly exciting"