Currencies

Santander Consumer Finance took advantage of relatively stable conditions in the Swiss franc market on Tuesday to print just its second bond in the currency.

Danske issued in a larger size and attracted more orders for its covered bond than Deutsche Bank did for its deal. The outcome was surprising given Deutsche’s rarity and higher quality collateral. But in any case the German issuer did well given that it could have done the deal without any support from the Eurosystem.

Westpac has announced a consent solicitation asking investors to agree to a switch in the maturity structure of six covered bonds from hard to soft bullet with a 12 month extension.

With foreign ownership of Chinese bonds still at very low levels, the decision to open China’s interbank bond market (CIBM) could truly alter global investment strategies. But, at least for now, the devil will be in the details, with analysts saying that foreign ownership is unlikely to surge in the short term.

The covered bond primary market began slowly this week with just one quickly syndicated €500m German benchmark from Deutsche Apotheker- und Ärztebank (Dapo) emerging. Despite its measly coupon the deal offered a hefty pick up to Germany. Covered bond supply is expected to improve in the week ahead.

The covered bond purchase programme is scheduled to end in March 2017. However, as maturing bonds will be reinvested, the European Central Bank could end up buying up to €40bn per year just to keep its portfolio from shrinking, according to new analysis from Crédit Agricole CIB research.

The European covered bond market has had to adapt to the distorting influence of the European Central Bank’s Covered Bond Purchase Programme (CBPP3), an unsettled outlook for global credit and ever lower yields. But relative value has improved with widening spreads, and real money investors are starting to return.

Torsten Elling will not be returning to Barclays, having been on paternity leave since June last year, The Cover understands.

The preferential regulatory treatment that UK covered bonds currently enjoy could deteriorate if the United Kingdom votes to leave the European Union in this June’s referendum, said Allen & Overy. Deals issued this week suggest the market has already priced Brexit risk in.

Royal Bank of Canada demonstrated the health of the primary covered bond market on Friday when it priced a €1.5bn deal that offered a minimal new issue concession. And with only one week to go before the European Central Bank’s policy meeting, other issuers will be keen to join apoBank, which mandated leads for a deal.

Even though the Swiss franc/dollar cross currency swap has been trading in negative territory through January and February, Amgen, the US biotechnology company, made an impressive debut in Swiss francs this week with a seven year bond, the largest in the currency this year.

Santander Consumer Finance opened up a new Tokyo Pro-Bond programme worth €10bn on Tuesday, following a similar move from its UK sister borrower last year.