Currencies

Finland’s OP Mortgage Bank shrugged off an appalling market backdrop to launch an exceptionally well received €1.25bn deal on Wednesday. Its first covered bond of 2012 provided solid proof of the covered market’s resilience to macro concerns and added weight to syndicate bankers’ arguments that issuers should take advantage of demand overhang.

Borrowers could decide to switch senior projects into covered trades, syndicate bankers told The Cover. This would follow the example Nordea set in April when it turned a planned senior deal into a blow out seven year covered deal.

The radio silence surrounding the suspension in 3CIF bonds this week is a textbook case of How Not To Do Investor Relations.

Non-Eurozone supply remains in high demand, but Caisse de Refinancement de l'Habitat (CRH) could be the first core European name to test the water this week, syndicate bankers told The Cover.

Bank of East Asia’s China branch raised Rmb1bn ($159m) from its second visit to the dim sum bond market late last week, offering a juicy yield pick up against outstanding notes from other lenders.

Berlin Hannoversche Hypothekenbank (Berlin Hyp) and Dexia Kommunalbank Deutschland (DKD) have bought back a combined total of over €3.5bn in public sector Pfandbriefe across 14 outstanding trades. As well as providing a precedent for other public sector lenders to follow, the buybacks should help tighten German Pfandbrief spreads in the secondary.

Despite the holiday shortened week, activity in the secondary covered bond market has been relatively good. Though not all houses attest to seeing flows, some banks have seen quite a lot. German and Scandinavian markets are very well supported, the UK has performed very well, France is mixed and Spain is offered.

Austria’s Hypo Noe Gruppe Bank convinced almost 100 investors to participate in its longest covered bond to date. It does not intend to issue another public sector trade this year, but told The Cover it is setting up a mortgage cover pool to fund its residential loans through covered bonds.

Hypo Noe has announced a €500m no grow 10 year public sector Pfandbrief on guidance of mid swaps mid 90bp area. Nykredit Realkredit finished roadshowing its first euro benchmark junior covered bond on Tuesday. Panama’s Global Bank is ready to bring its $200m inaugural deal. and DVB Bank might be expected to launch a Ships Pfandbrief before long.

Austria’s Hypo Noe Gruppe Bank took advantage of a lone issuance window on Wednesday to launch a strongly oversubscribed public sector backed 10 year trade. The rarity of the issuer, the quality of the collateral and the relative resilience of Austrian Pfandbriefe to recent volatility made the trade compelling. Falling Pfandbrief supply in the primary and public sector buybacks in the secondary, meanwhile, have increased appetite for a shrinking asset class.

Nykredit Realkredit on Tuesday finished a roadshow for its first euro benchmark junior covered bond since 2010. Some continental buyers are unfamiliar with the structure, and past deals have been priced far closer to senior than covered levels. However, Denmark’s largest mortgage lender rarely issues in euros, and a high spread and lack of alternative investment opportunities could draw a healthy mix of credit and rates buyers.

S&P cut Spain by two notches to triple B plus on Thursday night, leaving the sovereign precariously close to junk. And although government bonds have lurched 20bp wider, the Cédulas market has shown a stoic response. But the rating agency’s move came as Banco Popular also announced a jump in non-performing loans in its first quarter results – concentrating minds on the country’s unfolding real estate crisis to which Cédulas are inextricably linked.