PMM: Covered bond issuers make most of higher yields

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By Johan Lai
27 Apr 2021

French and German banks have led the resurrection of the primary covered bond market over the last two weeks, with the sterling market particularly active. They have been making the most of good conditions for borrowers. So far this year, covered bond issuers have paid an average concession of 0.15bp compared to the 2.93bp they paid in 2020.

Higher yields — up by about 10bp since the end of March — have helped drive more investors into deals, with the granularity of order books improving from around 40-50 orders per deal in the month to mid-April to around 60-70 in the most recent batch of transactions.

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