Covered bonds await pricing litmus test

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By Bill Thornhill
28 Feb 2020

Spreads on covered bonds are likely to gap a few basis points wider when the market reopens for business. There was no issuance this week amid fears about the spread of the Covid-19 coronavirus, but a German issuer could land a benchmark deal if government agencies are able to lay the groundwork in the primary market, bankers said on Friday.

The covered bond market has experienced its first week of no supply this year and, accordingly, pricing expectations have largely been focused on the secondary market.

Due to illiquidity, spreads have so far proved remarkably steady. But it seems doubtful that this situation can hold going into ...

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