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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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Covered bond volumes soared this week as borrowers — fearing increased volatility and execution risk — priced six deals before the European Central Bank meeting. But they need not have worried as the ECB’s action, which will constrict issuance, is likely to cause spreads to tighten so that execution risks will remain at bay for a lot longer.
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Banco Santander Totta surprised the market on Tuesday, announcing a mandate and opening books for its second deal this year. Though the transaction had nothing like the oversubscription seen in previous peripheral issuance, the quality of investors in the book was high.
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Danske Bank’s first covered bond of the year offered an attractive spread relative to its Nordic peers, making it a straightforward sell for its lead managers. But even so, the final pricing level was just one third of Danske’s differential against top tier Swedish covered bonds issued a year ago.