Covered Bonds
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The cost of funding was tighter than what the borrower could have expected had it issued in euros -
Market conditions were good but three of four deals on Monday proved underwhelming
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The market ‘lacks conviction’, which should support covered bond supply next week
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Tenor, attractive starting spread and green credentials enabled a larger than expected deal
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Demand for top rated short dated covered bonds remains healthy, despite hefty supply
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The short tenor and price transparency comforted investors, helping to drive early order book momentum
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Short maturity helped ensure ANZ paid a much lower concession for its deal than Bank of Nova Scotia
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Commerzbank’s transparent pricing ensured it was able to issue its largest covered bond ever
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EU spreads widen as supranational and agency investors hedged against Bunds face steepening losses
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The short tenor proved a decisive factor in capturing bank investor interest
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Sizeable deal could have been even larger had a shorter maturity been chosen
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Order books for sterling covered bonds have been slow to build and smaller than usual, despite a double digit spread widening
