Currencies

As primary supply remains elusive, focus is shifting towards the New Year and the question of whether issuance will resume when the market restarts in January. Syndicate bankers were reluctant to suggest either a solid reopening, or continuing malaise.

Commonwealth Bank of Australia has confirmed that it is monitoring the market, and though this does not constitute a delay to its inaugural euro benchmark, it may in practice amount to that, given difficult market conditions. ANZ and Westpac’s dollar deals both continue to trade soft amidst talk that leads are holding significant dollar covered bond inventory.

The ECB’s second purchase programme was one week old last Friday, having taken its first faltering steps on November 11. Its progress has been far from heartening.

Realkredit Denmark kicked off the Danish auction season on Monday, with sales in both euros and Danish kroner.

Despite hopes that the result of Spain’s general election would bolster sagging equities and pull in widening government bond yields, market conditions appear prohibitive at the start of a potentially shortened week.

UniCredit has overhauled its funding strategy to insulate itself from hostile wholesale markets, its head of funding said this week. With the senior unsecured market shut even for top tier issuers, the bank announced a new funding strategy for 2013-2015 with an “embedded” policy of no issuance in senior unsecured.

RBS braved a hostile market to price the second euro benchmark of the week on Wednesday. Strong domestic and offshore demand made up for a minimal German bid, ensuring a solid €750m print.

European covered bond markets continue to look in poor shape as the macro sovereign backdrop dramatically deteriorates. This suggests that Commonwealth Bank of Australia’s euro denominated benchmark is likely to remain on hold for the time being. But that should not delay Westpac, which is planning to open books on Thursday afternoon.

Australia and New Zealand Banking Group priced the first Australian covered bond on Tuesday, launching a benchmark dollar trade that attracted broad demand and a healthy level of oversubscription. Meanwhile RBS has opened books on the week’s second euro benchmark, though given the jurisdictions concerned CBPP2 remains unable to support the primary market.

Sparebank 1 Boligkreditt plumbed the safe haven bid for Norwegian assets, braving turbulent markets to issue a €1bn five year, which was priced at the tight end of guidance with a modest new issue premium.

The race to issue Australia’s first covered bond deal took an unexpected twist today as it emerged that the frontrunner, National Australia Bank, will fall into line with the other three Australian issuers and introduce indexation into its programme. ANZ has moved to the fore, announcing that it will open books for a US benchmark deal next week – by which time NAB’s final documentation should be ready. But whether ANZ will in fact take the glory, is not assured. Commonwealth Bank of Australia could be poised to make an announcement soon.