Euro

The conditional pass through (CPT) covered bonds issued by Aegon Bank should trade tighter than other Dutch CPTs, say analysts at Commerzbank research. Bankers say all CPT Dutch bonds should perform, as they are one of a few in core Europe that still offer a positive spread to mid-swaps.

Piraeus Bank has become the third of the four largest Greek banks to update its covered bond programme in what is likely to be a prelude to issuance.

Agence Française de Développement hit the sweet spot for supply-starved, yield-hungry investors on Wednesday with a 10 year euro benchmark.

Nykredit, the Danish lender, has improved its loss absorbing capacity and rating outlook with new ‘tier three’ instruments that are expected to replace maturing junior covered bonds.

The Eurosystem purchased fewer covered bonds last week than a week earlier reflecting a slowdown in primary activity twinned with increasing difficulty sourcing bonds in the squeezed secondary market. This has been most conspicuously felt at the long end of core markets where positive yields may soon disappear.

The European Stability Mechanism reopened the euro benchmark markets for SSA borrowers on Tuesday with a €5bn dual tranche deal.

The Basel Committee on Banking Supervision has updated its framework for the regulatory capital treatment of securitization. The reduction in minimum capital requirements for deals that meet “simple, transparent and comparable” (STC) criteria will bring the risk weight into line with covered bonds.

The covered bond primary market was kept busy on Tuesday with two Pfandbriefe issued in euros and dollars at the opposite ends of the curve. Though market conditions are constructive, bankers are concerned that the outlook will not look as pretty after the summer break.

Muenchener Hypothekenbank has mandated leads for a three year dollar-denominated Reg S mortgage-backed covered bond, the second from a German issuer this year.

Only one or two transactions are expected in the first half of this week but with many issuers in blackout supply prospects are set to remain dim exacerbating a technical squeeze.

Canadian Imperial Bank of Commerce has tapped its three year sterling covered bond at a tighter spread than it was initially priced and in a considerably larger size than the minimum it had planned.

The number of active covered bond borrowers looks set to hit a new record after Moody’s assigned its top rating to the hard bullet mortgage covered bond programme of Austria’s Raiffeisenlandesbank Oberoesterreich (RFLBOB).