Currencies

Socially responsible investors received a fresh menu of bonds on Monday, with a borrower announcing an inaugural climate bond, a regular SRI issuer entering a new currency and an agency returning to its sustainability format.

Skandinaviska Enskilda Banken (SEB) issued a €1bn seven year Swedish covered bond on Monday and attracted enough interest to tighten pricing, something that few issuers were able to do recently. However, even with double the concession DNB paid, the Swedish borrower attracted much less demand than the Norwegian one. SEB’s curve has been marked 2-3bp wider following the deal.

TSB Bank is in the market with Duncan 2015-1, its first UK prime RMBS which is a securitization of legacy assets inherited from Lloyds Bank. Meanwhile Belfius will soon be ready to move ahead with Penates 5 which has a special interest rate cap that replaces the swap and reduces rating agency induced counterparty risk.

Primary covered bond activity is expected to moderate next week with anywhere between four and eight deals possible, following 10 this week. Though spreads are wider now than before the covered bond purchase programme (CBPP3) was announced, investors are not taking advantage of the bargains on offer because liquidity is so poor.

The London branch of the Japanese firm has put two bankers ‘at risk,’ one of whom had been actively involved in emerging markets, covered bonds and SSA syndicate.

A senior FIG syndicate banker has quit BNP Paribas to move to Danske Bank in Copenhagen.

The European Commission (EC) has published a report in which it agrees with the recommendations of the European Banking Authority (EBA) that the preferential risk weight of qualifying covered bonds is appropriate. It also opens up the possibility of extending preferential treatment to dual recourse bonds backed by SME collateral, or European Secured Notes.

The question about whether the renminbi will be included the IMF Special Drawing Rights basket of currencies has already been decided. At least that’s the view from industry experts who are preparing for life after the RMB becomes a reserve currency.

The Norwegian covered bond borrower issued its second deal of the year on Wednesday. Though the final spread was on the generous side, and the book only just covered, the overall cost of funding was less than half what it paid in March.

A year after issuing its last euro denominated benchmark, Caisse Centrale Desjardins du Quebec (CCDJ) has mandated leads for a European roadshow.

Four issuers launched covered bonds on Tuesday following the four that launched deals on Monday, doubling supply from €3bn to €6bn so far this week. By virtue of its size, Compagnie de Financement Foncier’s (CFF) €1.25bn benchmark stood out, but the level of demand was far below its previous five year even though the concession was several times larger.

Covered bond sentiment has improved slightly from June, with investors becoming less pessimistic, according to a survey compiled by Crédit Agricole CIB research. Issuers have become less optimistic, but overall it is still a sellers’ market.