A senior bank investor buying for his firm’s liquidity coverage ratio (LCR) portfolio told GlobalCapital on Thursday that he does not fear negative yielding covered bonds. What he fears is a glut of long dated issuance that he cannot buy. But issuers remain unwilling to bring serious size with a negative yield.
Negative yields on covered bonds were not a problem as long as they paid a return over six month or three month Euribor, he said:“Anything that’s higher than the deposit rate is good."
He added that he also bought senior preferred bonds for a separate portfolio for ECB collateral