Hopes of covered bond supply rise as anaemic lending puts TLTRO cash out of reach

By Bill Thornhill
15 Feb 2021

Feeble bank lending figures suggest that some European banks will not be able to tap the ECB's Targeted Longer-Term Refinancing Operations (TLTRO) at the cheapest rate on offer. For those institutions, covered bond funding will become a compelling alternative.

Net covered bond issuance so far this this year has amounted to minus €21bn. This is equal to net supply for all of whole 12 months of 2020 and even lower than many bankers' already pessimistic expectations.

But one ray of hope for investors looking for more covered bonds ...

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