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Four banks brought dual tranche covered bonds in two days this week, to avoid being squeezed in congested market
This year's cumulative total issuance by financial institutions outstrips 2025's levels
◆ Issuer chose larger order size ◆ Strong supply of five year covereds cited ◆ Seventh German covered in three weeks
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Deal reviews
◆ Issuer chose larger order size ◆ Strong supply of five year covereds cited ◆ Seventh German covered in three weeks
◆ Banker said bonds offered no new issue concession ◆ Shinhan’s was one of six covered bonds on Monday ◆ Deal was fifth Korean covered this year
◆ Rare five year tenor ◆ Competitive pricing versus dollars and euros ◆ Sixth sterling covered from Canada this year
Issuance may relent next week but the pipeline for the rest of the year is uncertain, say experts
Opinion
Covered bond issuers have been reluctant to issue on the same day as a central bank announcement, but this is starting to change
The new European Secured Note market is keen to secure regulatory recognition for the new product but there are advantages to not having it
If it looks like a covered bond, acts like a covered bond and prices like a covered bond, then it probably should be treated like one
Easily dismissed as "fast money" with all the negative implications that can bring in the primary bond market, hedge funds are becoming increasingly important to covered bond issuers
Analysis
Covered market provides 'the deepest pocket of demand' among FIG asset classes
Asset class is about 5bp wider than at start of the year
Comments from regulators welcomed by ECBC head
After the busiest June since 2010, banks are well progressed in the covered funding programmes
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More from covered bonds
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The European Central Bank’s announcement of a third covered bond purchase programme is destined for failure. The size of the public market for benchmark euro covered bonds stands at about €570bn, suggesting the central bank would be unable to achieve anything close to its €500bn target through covered bonds alone.
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A few draft restrictions related to the eligibility of European covered bonds in the liquidity coverage ratio (LCR) have been dropped by the EC suggesting the final wording, due at the end of September, will be supportive for covered bonds. In contrast, covered bonds have been left out in the final wording of US LCR regulations, in line with expectations.
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Covered bond issuance is expected to pick up next week, after Caffil and Abbey mandated leads for benchmark euro deals on Friday. Caffil has the potential to price flat or even through mid-swaps in decent size, though Abbey will need to offer a pick-up to eurozone institutions as its bonds are unlikely to be eligible for the European Central Bank’s purchase programme.