Carnival keeps covereds calm as coronavirus fears spread

By Bill Thornhill
24 Feb 2020

Covered bonds were steady on Monday, with spreads reacting stoically in the face of mounting volatility in the credit and equity markets, which were hit by fears over the spread of the Covid-19 coronavirus. But with key covered bond investors only expected to return to their desks on Wednesday, following Germany’s carnival season, market participants remain braced for a delayed reaction in the asset class.

Two bank traders reported that covered bond spreads were unchanged on Monday but a third said the market was about 0.5bp wider overall, due to light selling of new issues.

The move was relatively contained in comparison to the core European senior unsecured market, where spreads were 5bp-7bp wider, ...

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