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Panel of experts in Seville praised the directive, but would welcome 'a bit of regulatory stability'
◆ Lead says shorter tranche demand lower than expected ◆ NIP paid at 'upper end' compared to recent deals ◆ Market slows for this year's Covered Bond Congress
Spuerkeess, Fairstone Bank of Canada and Evangelische Bank issued mandates for debut bonds
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Deal reviews
Panel of experts in Seville praised the directive, but would welcome 'a bit of regulatory stability'
◆ Lead says shorter tranche demand lower than expected ◆ NIP paid at 'upper end' compared to recent deals ◆ Market slows for this year's Covered Bond Congress
◆ Only sub-benchmark covered deal in the market on Tuesday ◆ Issuer paid a 'healthy new issue concession', says banker ◆ Pfandbriefzentrale planning new Swiss franc note
◆ Tuesday's only benchmark covered deal ◆ ASN's second covered in six months ◆ Short-end of the curve is an 'investor sweet spot', says bank
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
Analysts see covered bond issuance slowing to a more sedate pace from October through to the end of 2026
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
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More from covered bonds
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After recent volatility this week’s syndications were not straightforward. This was most conspicuously illustrated by Crédit Mutuel Arkéa, which opened books on Thursday for a €700m July 2023. The deal competed head to head with French peer, Caisse de Refinancement de l’Habitat, which tapped investors in the 12 year. After failing to get enough traction, Arkéa was forced to reduce the issuance size to €500m and set the spread at the wide end of guidance.
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The primary market sprang back to life on Thursday as two issuers launched benchmarks and a third tapped in benchmark size. But after recent volatility the syndications were not straightforward and there was a lot of price sensitivity in the books. The curious decision to supply at the long end made them even more of a challenge and the fact that two just scraped by, with one being downsized, suggested issuers have been slow to acknowledge the change in market conditions.
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Ever since it became clear that the Federal Reserve was in no mood to continue its quantitative easing programme ad infinitum, the markets have been on the back foot. Thursday’s reprieve came thanks to a downward revision of US growth. But that data is historical and might not warrant a change in the Fed’s stance. Though issuers were right to spot the opportunity and jump in with deals, the spurt of activity lacked co-ordination and smacked of desperation. If the primary market is to remain open, issuers need to be more flexible on timing and tenor.