Currencies

ASB Finance opened books on Tuesday for the first New Zealand covered bond in euros this year. The New Zealand market is illiquid so fair value is hard to gauge, but the new issue concession was “juicy,” said a lead.

Caisse Française de Financement Local (Caffil) and Länsförsäkringar Hypotek (LF Hyp) got strong receptions for their covered bonds on Tuesday as investors had plenty of fresh money to put to work at the start of what is likely to be a relatively dry quarter.

KA Finanz, the wind down entity formally known as Kommunalkredit Austria, has signalled its intention to issue covered bonds.

ASB, a New Zealand bank owned by Commonwealth Bank of Australia, is set to issue the first euro denominated covered bond of the year from the country, after mandating leads on Monday.

Lloyds defied mounting concerns over the outcome of this June’s UK referendum on whether to remain in the EU, raising €1.25bn of seven year funding on Monday. At the same time Leeds Building Society announced plans to issue its first deal in euros.

KfW tapped a April 2020 Kangaroo bond on Friday, with demand strongly driven by the Australian investor base.

The number of new covered bond issuers grew to five this year after Standard and Poor’s assigned a preliminary AAA rating to the covered bond programme of The Mortgage Society of Finland.

Covered bonds have had a great start to 2016, in terms of supply, spread performance, and participation in the market from real money investors, but this trend is unlikely to hold. Central bank action, once again, will corrode the market from both supply and demand sides.

China is mulling the possibilities of issuing an SDR-denominated bond, the People’s Bank of China governor Zhou Xiaochuan said on Thursday.

A quartet of SSA issuers printed Kangaroo bonds this week, helping push Kangaroo bond volume for March to a monthly level not seen in a year.

Rabobank has announced the sale of a €1bn portfolio of mortgages in a move that has pre-positioned the bank for tougher Basel IV regulations. By the time the rules are in force in Europe though, they may look different, especially for countries that are heavy users of covered bonds.

Since Shinzo Abe was elected as prime minister in December 2012, ‘Abenomics’ has been a buzzword for international and domestic investors alike. Abe’s determination to turn the Japanese economy around, combined with the aggressive style of his hand-picked central bank governor, has brought unprecedented attention to Japan in a time of global volatility. That makes the job of communicating the strengths of the Japanese economy to investors all the more important. GlobalCapital sat down with Eiko Kimata, director for debt management and JGB investor relations at Japan’s Ministry of Finance, on March 11 to find out how investors have reacted to the central bank’s recent move into negative interest rates, how international investors are viewing the potential of the Japanese economy, and how the Ministry of Finance can best approach a tricky funding environment.