Euro

The European Central Bank is likely to lower the rate of covered bond purchases over the remainder of this year, according to analysts at Rabobank.

The Swedish issuer was lucky to raise €1bn of six year funding on Monday in the context of a weaker credit market, tight overall spreads and ultra-low yields. Bankers do not believe such execution would have been possible had the deal been postponed by even one day.

Bank of New Zealand (BNZ) issued its first covered bond in four years and enjoyed a solid reception. The bonds offered a double digit spread over the Australian parent and a fair pickup to where this week’s deal from Westpac New Zealand was indicated.

The European Commission’s impending proposal on the prudential treatment of sovereign bonds could boost the appeal of covered bonds, said Fitch in a report this week.

Strong demand helped two Dutch issuers bring €500m RMBS deals this week, with Obvion opting to boost the deal size of its market-first green RMBS after building a bumper order book dominated by dedicated green investors.

Fitch may assign a rating uplift to Italian SME covered bonds, or Titolo Obbligazionari Collateralizzati. The upbeat rating assessment follows a survey conducted by analysts at Société Générale which suggests more than 40% of covered bond investors would consider buying such deals.

Bank of New Zealand has mandated leads for the second Kiwi covered bond of the week. At the same time Suncorp Metway announced plans to issue an Australian dollar benchmark and UBI Banca has issued a tap.

The Bank of Montreal has priced its first covered bond in dollars since Canadian covered bond legislation was implemented in June 2012. Having been out the market for so long, the deal benefitted from “scarcity value” and was priced with no new issue premium.

Nykredit issued the first contractually bail-inable senior debt on Monday, in a well-received deal that could set the tone for the growth of the asset class in Europe.

Competition is becoming much fiercer in the Turkish banking sector. After years of rampant loan growth in many markets, banks will have to fight much harder to find new customers and bigger margins in the future.

Westpac New Zealand issued a comfortably oversubscribed €750m five year covered bond on Tuesday and priced at the tightest spread ever for a New Zealand covered bond. At the same time, NordLB’s Luxembourg subsidiary issued a less well subscribed €500m seven year.

BRFkredit, the Danish mortgage bank, has mandated leads for a roadshow.