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Covered bond issuers have been reluctant to issue on the same day as a central bank announcement, but this is starting to change
◆ Austrian bank pays healthy new issue premium ◆ Small order book saw minimal attrition ◆ Banker said market was 'heavier' at open
◆ French lender fixed deal at half the order book's size ◆ Covered offered small new issue premium ◆ Banker said CRH's and UniCredit Austria's deals showed 'fatigue'
Data
Sub-sections
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Deal reviews
◆ Aussie bank has primary to itself on Friday ◆ Deal ‘sufficiently different,’ say bankers ◆ Both tranches offer small premiums
The awards recognise the market's leading deals, issuers, banks and other participants
◆ German bank lands flat to fair value ◆ Order book closes at over two times covered ◆ Deal NordLB's first in almost a year
◆ Issuer lands in 'the place to be' amid strong demand for covereds ◆ Achieves its largest covered book since at least 2023 ◆ After 7bp tightening the bond was spotted another 2bp tighter to erase new issue concession
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
Benchmark issuance is running 13% ahead of last year
Burst of deals this year in uneven market suggests investors want alternatives to Treasuries
Central and Eastern Europe earmarked as an area of growth by market participants
With masses to fund and spreads super-tight, banks will race to market, but central banks are expected to tighten
More articles
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LHV Pank has mandated leads for its inaugural deal and the second ever to be launched under the newly established Estonian covered bond legal framework. -
Unlike many banks, NordLB had been actively reducing its balance sheet well before the coronavirus crisis hit, so its need for funding is more modest than most. Though it seems likely Pfandbrief issuance will eventually return, German borrowers are hesitant to come to market, especially when there is cheap, plentiful central bank funding available. And, while Pfandbrief investors are well protected, it seems likely that a slow recovery in the commercial real estate market and a more questionable outlook for SME lending, will take its toll on lenders’ business models.
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Nykredit tapped its 1% callable covered bond due 2050 on Wednesday to take it up to Dkr100bn (€13.4bn), making it the biggest long-dated covered bond ever publicly issued in Europe and highlighting the availability of long-dated funding for banks looking for alternatives to the glut of central bank liquidity made available to fight the economic effects of the coronavirus pandemic.
