Euro

Abbey National's €1bn five year issued Monday was comfortably oversubscribed but exhibited some price sensitivity.

Caixabank has become the fourth Spanish bank to tap the covered bond market this year with its largest Cédulas in five years. That four borrowers have launched similar sized deals of around €1.5bn so far this year suggests volatile market conditions are causing banks to frontload their funding.

Hamburger Sparkasse AG (Haspa) and Hypo Tirol Bank have respectively mandated leads for a roadshow and an investor call update.

The European Central Bank has said efforts to raise minimum standards in the covered bond market should be ambitious, and it sees considerable benefits in harmonisation. The ECB was responding the European Commission’s proposals for harmonisation of the covered bond market.

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.

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.

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.

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.