Commerzbank

Guarantor: Federal Republic of Germany

The covered bond market has stayed open through August but it could get busier next week as issuers ready themselves for new deals ahead of the European Central Bank’s next meeting in September.

A lack of supply in the summer months has helped to extend an already impressive rally in the bank bond market, leaving cash-rich investors hungry for a wave of new supply.

Nederlandse Waterschapsbank brought some supply to the sparse long end of the SRI market on Tuesday, printing a trade that alongside Rentenbank was part of a strong re-emergence of euro supply after the summer.

German medical care company Fresenius attracted 45 banks into a €3.8bn refinancing, closing the transaction on Tuesday.

Germany’s WL Bank left little on the table when selling a 10 year mortgage Pfandbrief on Tuesday, following the example of recent trades from Commerzbank and Münchener Hypothekenbank (MuHyp) and setting a final price very close to fair value.

The euro market for public sector borrowers appears to be fully reopening after the summer break, with a pair of issuers bringing mandates in very different tenors. Both trades are likely to benefit from the lack of supply over the last few weeks, said bankers.

Though there is still scope for the financial institutions bond market to start creeping back to life this week, participants think they will have to wait until September before new issuance volumes really start to perk up.

Kuwait’s Burgan Bank’s Turkish branch, Burgan Bank AS, signed a dual tranche facility of around $205m from 14 banks, at slightly higher pricing than its top tier compatriots.

Goldman Sachs opened the Swiss market in the middle of the summer holidays on Thursday, selling the largest US financial Swiss franc bond in the last two years — a consequence, bankers said, of clever timing from a respected name.

Commerzbank attracted as much demand and paid an identical new issue premium for its €750m 10 year covered bond issued on Thursday as Münchener Hypothekenbank (MuHyp) did for its €750m nine year launched a day before. The two transactions show that the summer lull is over and the covered bond market is back in business.

AR Packaging, the Swedish maker of packaging for food, increased its LBO loans with a dividend recapitalisation deal on Tuesday. The move follows a trend of loan borrowers taking on more leverage ahead of new European Central Bank guidance on leverage limits.