Austria

Deutsche Pfandbriefbank (pbb) and Dexia Kommunalbank are both exposed to bonds which are likely to be written down following the debt moratorium issued by Heta Asset Resolution — the Hypo Alpe Adria bad bank — last week. Several other German covered bond issuers are likely to be affected, said Commerzbank analysts. Austrian issuers are also being hit and have been put on review for downgrade by Moody’s.

The Austrian Financial Markets Authority (FMA) said on Sunday that it will proceed with a resolution of Heta Asset Resolution AG (HAR), the state-owned wind down company responsible for disposing of the non-performing assets of Hypo Alpe Adria (HAA). The process is expected to provide the first practical test of the covered bond market’s exemption from bail in said analysts at Deutsche Bank.

Despite a string of successful Austrian covered bonds launched recently, Commerzbank analysts are cautious on the outlook for Austrian banks. The analysts list a number of risks and conclude that there is still a substantial chance of more negative headlines emerging in the next few months.

UniCredit Bank Austria closed the spread gap to one of its Austrian rivals on Wednesday when it priced a €500m 10 year covered bond. The shrinking spread difference speaks to the long term credit curve flattening trend but also shows that worries over Austrian banks’ Swiss franc exposure are no longer being factored in to pricing.

Investors were eager to buy Vorarlberger Landes-Und Hypothekenbank’s mortgage-backed Pfandbrief on Wednesday. The deal’s success suggests few were worried about the issuer’s Swiss franc exposure, possibly because the income of many obligors is also in Swiss francs.

Vorarlberger Landes-Und Hypothekenbank (Vorhyp) has mandated leads for a sub benchmark sized mortgage Pfandbrief.

Erste Bank’s first covered bond in three years issued on Thursday was nearly three times subscribed in less than an hour. The rollicking result showed it was unaffected by mounting concerns in the Austrian bank sector generally, and over its peer Raiffeisen Bank in particular.

Wienerberger, the world’s largest brick maker, has replaced two lines of credit with a €400m five year revolver.

It is a truth universally acknowledged that the important parts of any financial conference typically take place off the stage rather than on it.

Austrian lender Hypo Tyrol issued its first publicly distributed deal on Wednesday, pricing a sub benchmark sized €300m public sector Pfandbrief. The transaction’s smaller than usual size meant it was not eligible for the covered bond indices, which deterred large investors. However, investors were compensated for the less liquid size with a wider than usual spread.

Hypo Tirol has mandated leads to roadshow its inaugural syndicated €300m public sector backed Pfandbrief starting this week.

Hypo Noe priced its inaugural €500m Austrian mortgage-backed Pfandbrief on Monday through the bid side of its interpolated public sector curve, and with barely any sensitivity in the book. The strong result is a testimony to the enhanced demand for all covered bonds that offer a spread over mid-swaps and anything that is potentially eligible for the forthcoming European central bank purchase programme.