Currencies

Deutsche Hypothenkenbank priced its first Eu1bn print in almost five years and its first public sector backed deal since 2005. Despite rarity appeal, the bond was priced at the wider end of guidance, illustrating price sensitivity among large German accounts.

Deutsche Hypothekenbank Hannover is set to price a public sector backed Pfandbrief this afternoon, following NIBC’s first public deal which was priced at the end of last week. The book build on both northern European deals has been seamless, despite further volatility and credit rating concerns around peripheral Europe.

Latest figures from Dealogic show how much covered bonds have increased in importance to the detriment of the senior FIG market. The data provider said on Monday that global covered bond issuance reached $157.8bn in the first quarter, the highest quarterly volume on record. Volume was boosted by a 37% increase in the number of jumbo covered bonds as volume and deal count reached new records.

Covered bond secondary market levels have remained largely unaffected by Moody’s downgrade of 18 Spanish covered bond programmes on March 25, which followed a downgrade of the borrowers’ issuer ratings. Although all the downgraded institutions remain under review, or on negative outlook, market traders said the immediate effect of the cuts has been negligible.

The Netherlands NIBC Bank brought primary market activity to a close this week, launching an inaugural Eu500m three-year deal on Friday via leads LBBW, Natixis, and RBS, which priced the new issue at 105bp over mid swaps.

Axa Bank Europe sold its second ever covered bond on Tuesday, a tightly priced Eu500m five year deal.

Caja Madrid became the latest Spanish name to come to market on Wednesday, though it did not enjoy the tight pricing of its compatriots. Its Eu750m three year cédulas hipotecárias came in the wake of twin Spanish deals from Banesto and BBVA on Monday, which priced inside initial guidance.

Finland’s OP Mortgage Bank has closed books on the second Finnish covered bond of 2011, a Eu1bn five year benchmark deal, on Wednesday.

AXA Bank Europe will price a Eu500m no grow issue at 63bp over mid-swaps later on Tuesday, via leads Bank of America Merrill Lynch, BNP Paribas, Crédit Agricole, HSBC, Natixis, and Société Générale.

Banco Espanol de Crédito sold a Eu600m no grow issue off the back of one of the borrowers largest ever order books on Monday.