Euro

The Estonian government is working on a draft law that will allow local banks to issue covered bonds, said the Ministry of Finance.

The Dutch government has urged the European Commission to address the “unbalanced” regulatory treatment of securitization compared to covered bonds, complaining of “disproportionate” incentives to invest in covered bonds versus ABS.

Virgin Money has mandated leads for a new UK prime RMBS deal from its established Gosforth shelf, which will be issued in multiple currencies and will look to attract US investors with a 144A registration.

After surpassing several milestones in 2015, the covered bond market should be set for another record-breaking year in 2016. Bill Thornhill talks to Société Générale CIB’s head of covered bond origination, Ralf Grossmann, and the bank’s senior covered bond research analyst, Cristina Costa, about their predictions and recommendations for the forthcoming year.

Covered bond new issue spreads are wider today than when the European Central Bank began buying for its third purchase programme a year ago. Bill Thornhill examines the causes for this anomaly and considers how the market will look in 2016.

Rating: Baa1/A+/A-

Nordea Eiendomskreditt issued the second sterling three year floating rate covered bond of the year on Wednesday following the earlier success of Lloyds which reopened the market on Tuesday. And after a strong reception for Toronto Dominion’s (TD) euro five year benchmark, Bank of Montreal and DNB Boligkreditt mandated leads for euro denominated transactions to be priced on Thursday.

Caisse Francaise De Financement Local (CAFFIL) raised €1.5bn in the covered bond market on Tuesday with a two tranche public sector-backed deal. The higher yielding €500m 15 year tranche was subscribed, but the €1bn six year was not.

Fitch has published a detailed response to the European Commission’s (EC) consultation on harmonisation of the covered bond market, outlining areas that could provide a material rating benefit in some countries, but adding that a degree of market fragmentation is inherent in the covered bond market.

The Toronto-Dominion Bank priced a €1bn five year covered bond on Tuesday, with the issuer able to tighten pricing from initial price thoughts on the back of strong demand for the non-ECB eligible paper.

The global head of debt capital markets for financial institutions and public sector issuers at Natixis has left the bank.

LBBW mandated leads for a euro Pfandbrief, and Lloyds mandated for a sterling benchmark on Monday, while another issuer could emerge at short notice. But the primary covered bond market is not expected to pick up properly until next week as a European holiday on Wednesday and US Non-Farm Payrolls on Friday mean the only potential funding window this week is on Tuesday.