Currencies

Fitch has downgraded covered bonds issued by Marfin Popular Bank from BBB+ to BBB and kept them on rating watch negative, following a downgrade of the issuer’s default rating on June 1.

Sweden’s Länsförsäkringar Hypotek (LF Hypotek) has finished roadshowing and will come to market early next week. After a successful euro covered bond debut in March last year, the borrower should benefit from some market familiarity and heightened demand for core paper.

After the activity and drama of the first part of the week, Ascension Day holidays across most of Europe have lent a quiet tone to the market and a more sedate close is anticipated. But with as many as five deals mandated and a few others rumoured, the pace is likely to pick up next week.

Caisse Refinancement de l’Habitat on Wednesday added to this week’s sequence of heavily oversubscribed issues from borrowers in core jurisdictions. The Eu1.25bn trade, which was priced through Barclays Capital, Crédit Agricole, HSBC, Natixis and Société Générale, was the second French long 10 year within a week, but investor demand for core paper is so buoyant that the order was still more than twice covered.

UBS made its first appearance in the covered market for over a year on Thursday. The Swiss borrower will price later today a three times oversubscribed Eu1bn five year deal, which a syndicate lead said had achieved the tightest pricing in that maturity outside of Pfandbriefe, since the collapse of Lehman Brothers.

Scandanvian borrowers have joined their French and German core colleagues to take advantage of a market highly receptive to quality issuance. SpareBank 1 Boligkredit tapped the dollar space on Tuesday, while Nordea Bank Finland priced a well oversubscribed three year euro trade on Thursday. Aktia real estate mortgage bank has mandated banks for a series of investor meetings beginning in early June.

Benchmark issuance in the covered market continued for the third straight day on Wednesday, heralding a return to the form of early in the first quarter. Caisse de Refinancement de l’Habitat on Wednesday launched the second French long 10 year within a week, keeping books open for only half an hour for a Eu1.25bn trade.

Dexia Kommunalbank braved a difficult market on Monday to print a Eu1bn 2.75% May 2014 issue. Though not quite as well received as Dexia Municipal Agency’s Obligations Foncières two weeks ago, the benchmark public sector Pfandbrief was priced in line with guidance and enjoyed strong participation from domestic investors.

Issuance from Italy, the fastest growing euro covered bond segment, has this year already exceed by almost 20% the total amount sold from that jurisdiction in 2010, according to Natixis analysts.

Société Générale priced the second euro Obligations de financement de l’Habitat on Tuesday, at a level 20bp inside of BPCE’s debut OH with the same maturity in early May. Syndicate leads said a strong reception had been predicted following an in-depth roadshow the previous week, though others said the scale of demand for the debut deal had been surprising nonetheless.

Société Générale convinced almost 150 accounts to participate in its debut euro Obligations de financement de l'habitat. The trade exceeded the already high expectations of syndicate officials following the first euro OH from BPCE.

The covered bond market began the week with a euro benchmark for the first time in almost two months. Following the success of Dexia Municipal Agency’s five year trade on May 12, and the strong reception for short dated core issuance last week, Dexia Kommunalbank launched a three year euro benchmark on Monday