Currencies

After roadshowing nearly four months ago, New Zealand’s ASB Bank finally took the plunge and opened books for a €500m five year deal on Thursday. Despite a high rating and fair spread, the deal competed head on with Banca Carige (see other story) and found only a tepid investor response. At the same time, Canadian Imperial Bank of Commerce opened books for a long three year denominated in Aussie dollars.

HSBC has returned to the covered bond market for the second time this year with a seven year deal which, like its earlier transaction, was notable for its breadth and depth of demand.

Banco Bilbao Vizcaya Argentaria has begun updating the value of properties backing mortgage loans collateralised in its Cédulas. Though this is likely to lead to a decrease in the overcollaterlisation (OC) ratio, Moody’s applauded the move as it will improve transparency on the credit quality of the cover pool assets.

Banca Carige has mandated leads for a potential euro-denominated covered bond (Obbligazioni Bancarie Garantite) benchmark transaction, which could be launched on Thursday just as the US debt ceiling deadline falls due.

Despite the close proximity of the US debt deadline on Thursday, the covered bond market was stable and well supported on Tuesday, said bankers, who are waiting for imminent deal mandates from Austria and Italy.

This week’s three Italian covered bond issues continued to outperform in secondary trading on Friday while the primary market paused for breath. Meanwhile, Moody’s has put Credito Emiliano’s mortgage covered bonds on review for downgrade, highlighting the benefits of smaller Italian banks coming to market before further rating moves.

Two issuers succeeded with covered bond debuts on Thursday. Mediobanca’s choice of a 10 year maturity for its inaugural deal was vindicated when it priced a €1bn benchmark comfortably inside guidance, while Commerzbank’s first foray into the mortgage Pfandbrief market enjoyed the smooth execution expected of a leading German bank.

Italy’s Mediobanca decided not to press ahead with a covered bond debut on Wednesday as the Republic of Italy launched a seven year BTP on the same day. Instead the issuer is expected to launch a deal targeting the mid to long end of the curve on Thursday, when it is likely to be joined by Commerzbank, which has mandated for a seven year mortgage Pfandbrief.

Commerzbank plans to issue a seven year mortgage Pfandbrief on Thursday, in its first mortgage-backed deal not issued from Eurohypo’s programme.

Moody’s has assigned a triple A rating to the €199m of commercial mortgage back Pfandbriefe issued by NATIXIS Pfandbriefbank AG.

Spain’s new export finance covered bonds, Bonos de Internacionalización (BI), have a weaker credit profile than existing export finance covered bonds but greater flexibility, Moody’s said this week. The Spanish authorities’ introduction of the new bonds comes as they work to improve the efficiency of covered bonds as a funding tool.

The covered bond market continued to trade on a stable footing on Monday, even though the US could technically default in less than two weeks. Italy’s UBI Banca successfully priced a €1.25bn deal on a comfortably oversubscribed and granular book, at a very competitive spread.