Currencies

Principality Building Society priced its Friary No.3 prime UK RMBS deal, landing £475m in what one banker called a ‘tricky’ market. As with sterling covered bonds, the RMBS primary market also seems to be pricing at successively wider levels.

Swiss franc investors made the most of a rare opportunity to buy Austrian sub-sovereign paper on Thursday when Land Niederoesterreich (Lower Austria) tapped its April 2021 and September 2023 bonds.

AIB Mortgage Bank attracted robust demand for its seven year covered bond, the first deal from Ireland this year. The transaction benefitted from a very attractive spread to the government curve compared with deals issued by Spanish and Italian banks, and the return of demand from asset managers.

Haitong International Securities has hit the market for a HK$8bn ($1bn) three year bullet, which could increase in size depending on demand.

Royal Bank of Canada (RBC) issued a five year Aussie dollar floater on Wednesday, attracting strong demand from Australian and Asian investors.

Kookmin Bank was set to open books for its second dollar-denominated legislative covered bond on Thursday.

UK Asset Resolution, the UK government’s holding company that owns the mortgage book of Bradford and Bingley (B&B) following its nationalisation in September 2008, has announced a tender offer and early redemption of the issuer’s covered bonds.

The renminbi's acceptance into the IMF Special Drawing Rights (SDR) basket and Chinese initiatives such as the Asian Infrastructure Investment Bank, are leading to a new monetary order, according to speakers at the Asia-Global Dialogue 2016 conference, held in Hong Kong on January 28.

Toronto Dominion Bank opened books for the fourth three year floating rate sterling benchmark of the year and was set to price the deal at the widest spread of the year. Kreissparkasse Koeln has announced a sub-benchmark sized eight year Pfandbrief.

Commonwealth Bank of Australia has successfully issued the first euro covered bond from an Australian bank in nearly 12 weeks. Swapped back into Australian dollars the 15 year tranche provided cheaper funding than the five year.

Established covered bond investors are often sceptical about conditional pass through deals. The structure allows the maturity of their investments to be extended, perhaps by decades. But they could be safer than long dated bullet deals.

The European Central Bank’s extra haircuts for covered bond repo, which took effect on Monday, could spur issuers to consider using conditional pass through (CPT) structures. The higher ratings issuers can achieve using CPT structures mean lower haircuts.