Currencies

Bank investors of Norwegian and Swedish covered bonds will be obliged to hold more capital against their investments from next week. Though this is likely to have implications for a considerable number of noteholders, the absolute change is small and is unlikely to affect demand, said analysts at Danske Bank research.

The covered bond market reacted stoically to the surprising outcome of the UK’s referendum to leave the European Union with the primary market expected to restart in two weeks.

Capital markets people thought Brexit would not happen because the UK electorate always chooses the sensible option in the end. But it hasn’t.

The Swiss bond market is due a readjustment after the UK’s vote to leave the European Union on Thursday, market players said.

The UK may have knocked the eurozone periphery off a cliff as it stumbled on its way out of the European Union on Friday morning. Government bond spreads on Friday echoed those during the eurozone sovereign debt crisis. The gap between Germany and the periphery has opened up like the chasm that has developed between UK voters and the political establishment.

Capital markets have been hit by a cataclysm, the worst political shock since 11 September 2001 — though the immediate effects on financial markets may not be as grave as those of the 2008 financial crisis, because the solvency of banks is not in question.

The People’s Bank of China said on Tuesday it is contemplating the ‘orderly participation’ of commercial banks to trade in the offshore renminbi market. On paper, the proposed move seems to be a further opening up of its FX market. However, market participants say Beijing’s true aim is to exert greater influence on the CNH and maintain the stability of the renminbi.

Investors have agreed to a number of changes to Nationwide Building Society’s covered bond programme. The publication of voting results in full is in line with the European Central Bank’s recommendation — but something that is still rarely seen in the market.

The Bank for International Settlements (BIS) and the Monetary Authority of Singapore (MAS) have been investing in RMB assets ahead of the currency’s introduction into the IMF special drawing rights (SDR) basket of currency in October 2016, the two institutions said this week.

The deadline for submitting bids for the European Central Bank’s targeted long term refinancing operations (TLTRO II) is due at the same time as the UK EU referendum result. SEB analysts anticipate borrowing will be higher than the median forecast and think this will help alleviate potential Brexit related spread widening.

Compagnie de Financement Foncier (CFF) has updated its EMTN Obligations Foncières programme documentation to permit issuance of soft bullet covered bonds, bringing its deals into line with most others. The move comes as Germany considers updating its law to allow for soft bullet extensions.

Kommuninvest is planning to bring the largest ever green bond in Swedish kronor in the third quarter of the year, after debuting in the format with a dollar bond in March.