Covered bonds’ new world vintages bring fresh flavour to euro palates

Covered bond issuers from Canada, Sweden and Australia gathered together in March as participants in this GlobalCapital roundtable to discuss their markets. Borrowers still have plenty of issuance capacity but their plans for supply are likely to remain steady rather than spectacular over the foreseeable future. Issuers are conserving their covered pool collateral in case unsecured access becomes more constrained due to increased market volatility. Local currency issuance complements US dollar issuance, but for Australians and Canadians, the euro market offers more depth, especially at the long end of the curve. But for many issuers, and especially the Canadians, the cross-currency swap only became attractive in the summer of 2013. Fortunately, this coincided with local legislative programmes becoming operational. Australian, Canadian and Swedish covered bond issuers all benefit from solid senior ratings, stable real estate markets and they all present a great diversification tool. And, with a very limited amount of bonds outstanding in euros, investors have plenty of credit line availability.