Austria

Despite the close proximity of the US debt deadline on Thursday, the covered bond market was stable and well supported on Tuesday, said bankers, who are waiting for imminent deal mandates from Austria and Italy.

HSH Nordbank and Raiffeisenlandesbank Niederösterreich-Wien joined the rush of issuers bringing deals on Wednesday, selling five year and seven year no grow €500m benchmarks, respectively. While RLB NW continued the price tightening trend for Austrian landesbanks, HSH Nordbank offered a generous spread to make sure any rating or reputational concerns among investors were cast aside.

Five issuers from France, Germany, Ireland, Austria and Italy have joined the covered bond pipeline. And, with the European Central Bank ready to consider further extraordinary liquidity measures, the conducive technical backdrop looks set to remain. Despite this, the longer term supply outlook remains uncertain and overall issuance, which is at the decade’s low, is not about to improve.

ANZ New Zealand and Kommunalkredit Austria are poised to price €500m five year covered bonds. Both deals have gone without a hitch, with oversubscriptions from a broad range of investors. However, given the lacklustre performance of other recent deals, leads were cautious on pricing and offered attractive spreads.

Bank Austria has tapped an outstanding five year by less than the maxmum it had targeted. But leads did not think any conclusion could be drawn from this.

Austria’s Raiffeisenlandesbank Niederoesterreich-Wien (RLB NW) is set to price its first deal of the year late in September and mandated leads on Thursday for a benchmark euro deal that will follow a three day roadshow.

Buying interest for core paper in the secondary market remains buoyant, despite volatility in other corners of the credit markets, and bankers reckon a deal from a strong name would still work. Issuers decided to hold off on Wednesday, however, as Kommunalkredit Austria joined the pipeline.

Bank Austria opened books for its inaugural €500m five year mortgage backed deal on Tuesday, attracting a book subscribed by more than three times from a wide range of investors. The bank was ready to do the deal weeks ago, but held back on expectations that a downgrade of Italy would hit its ratings.

Two issuers joined the primary covered bond pipeline on Tuesday, improving the market outlook. Caisse Francaise de Financement Local (Caffil) and Raiffeisenlandesbank Niederösterreich-Wien AG have both mandated banks for deals, which will be preceded by roadshows

Raiffeisen-Landesbank Steiermark built a solidly oversubscribed book for only the second 15-year covered bond of the year, enabling leads to price inside guidance in what they said was still an issuers’ market, despite the more volatile macroeconomic backdrop.

Austria’s Raiffeisen-Landesbank Steiermark has mandated leads for its debut mortgage-backed covered bond, a no grow €500m issue that could be launched as early as Wednesday. However, it has yet to decide on maturity, perhaps waiting to see how well other deals are received before making a final call.

Covered bond issuers decided against bringing benchmark bonds on Friday despite a better backdrop, but there are several potential deals in the pipeline and stronger sentiment should encourage issuers looking to come next week, said bankers.