Austria

Austria’s Raiffeisenlandesbank Niederoesterreich-Wien (RLB NW) sold its inaugural benchmark covered bond on Tuesday, building a four times oversubscribed book for a 10 year mortgage backed trade.

SSA and corporate markets were busy on Tuesday, keeping the primary covered bond quiet. But issuance should improve this week as investors filter back from holiday, said bankers, though they warned that as spreads have tightened a long way in a short time the market may widen after the initial flurry of deals.

Raiffeisenlandesbank Niederösterreich-Wien (RNW) is preparing to become the second Austrian Raiffeisenlanesbank to launch a public covered bond. The borrower begins a European roadshow in the second half of August and should bring its mortgage-backed debut in early September.

Austria’s Hypo Noe Gruppe Bank convinced almost 100 investors to participate in its longest covered bond to date. It does not intend to issue another public sector trade this year, but told The Cover it is setting up a mortgage cover pool to fund its residential loans through covered bonds.

Austria’s Hypo Noe Gruppe Bank took advantage of a lone issuance window on Wednesday to launch a strongly oversubscribed public sector backed 10 year trade. The rarity of the issuer, the quality of the collateral and the relative resilience of Austrian Pfandbriefe to recent volatility made the trade compelling. Falling Pfandbrief supply in the primary and public sector buybacks in the secondary, meanwhile, have increased appetite for a shrinking asset class.

Primary supply slowed on Thursday as poor peripheral data helped increase volatility, though the market has €3bn in successful benchmark supply to digest. Berlin Hannoversche Hypothekenbank Aktiengesellschaft (Berlin Hyp) announced a tender of four public sector backed Pfandbrief trades, following a well received public sector backed deal from UniCredit Bank Austria.

UniCredit Bank Austria launched its first benchmark covered bond this year, selling a twice oversubscribed €500m no grow trade on Wednesday. The second public sector backed Pfandbrief in as many days was priced in line with revised guidance, attracting almost 100 accounts.

Austria’s Bawag has invited holders of its €1bn 4.25% 2014 to tender their notes and is willing to buy up to €500m at a spread of mid-swaps plus 55bp. The offer is unusual for being the first covered bond tender from a borrower in core Europe and the first which targets bonds that trade above par.

Erste Group Bank comfortably printed €1bn off the back of the largest ever book for an Austrian covered bond on Wednesday. The successful 10 year offering has opened the door for other Austrian names and put to bed negative headlines following the sovereign’s recent downgrade.

Erste Bank launched the first Austrian benchmark of 2012 on Wednesday. It was also the first Jumbo trade from the region since last May.

Covered bond spreads have survived sweeping sovereign downgrades by Standard & Poor’s on Friday. Only French issuer Dexia was reported wider on Monday morning, while the LTRO cash injection has ensured short dated Spanish and French paper remains highly sought after.

Austria’s Erste Group has said it will increase its use of covered bonds to meet €3bn of long-term funding needs next year. The issuer does not plan to participate at all in the senior unsecured wholesale market in 2012, a segment that provided three quarters of the group’s funding in 2007.