Austria

The additional tier one (AT1) market has plenty of room left to rally, according to a new report from analysts at Morgan Stanley, even though valuations are already drawing close to other asset classes.

This week's funding scorecard looks at the progress of Europe's supranationals and agencies in mid-November. Joining the scorecard this week is the European Union, which launched its Support to Mitigate Unemployment Risks in an Emergency (SURE) programme in October.

Despite lower yields and some price sensitivity, Bawag found solid demand for its 15 year Pfandbrief, which was issued on Thursday flat to the curve.

Austrian lender Bawag has taken advantage of the sell-off in rates markets to mandate leads for a 15 year covered bond which, like de Volksbank’s recent deal, should also deliver a positive yield.

Austrian semiconductor maker AMS has returned to the convertible bond market for more financing, raising €750m.

Republic of Austria

It was a moderate week for supply in the primary euro public sector bond market but the issuers that did come found ample demand, setting up a decent backdrop for the expected arrival of the European Union’s big borrowing programme next week.

Austria built a large order book as it came to the market for its final syndication of the year on Thursday, ahead of the expected arrival of the European Union as a mega borrower next week.

The Republic of Austria picked banks to lead a new 20 year euro benchmark on Wednesday, while the European Stability Mechanism surprised some market participants by sounding out banks for a deal next week, which could clash with the EU’s grand arrival as a supersized issuer.

Luminor’s Estonian cover pool will have Latvian mortgages, Bawag’s Austrian cover pool will include Dutch mortgages. And once merger plans are fully completed, Caixabank’s cover pool will include those from Bankia, making it Spain's biggest, with a share of almost a third of the Spanish covered bond market.

Bank Austria UniCredit (Baca) and Bawag issued tightly priced and exceptionally well subscribed covered bonds this week, reflecting the scarcity of issuance from the region and in their chosen tenors.

UniCredit Bank Austria (Baca) was set to issue its fastest growing, most subscribed covered bond ever on Tuesday and Sparebank 1 Boligkreditt was posed to bring ts most subscribed deal with its most granular order book ever. Both covered bonds were priced flat or slightly inside fair value and illustrated that market conditions are at the best they've been this year.