Euro

Caja Rurales Unidas issued a €750m five year deal on Thursday, building a slightly oversubscribed book in a short time frame by offering a relatively attractive new issue premium.

Berlin Hyp’s €500m five year mortgage backed Pfandbrief issued on Thursday ranked as one of the more highly oversubscribed deals of the year from Germany and broke a succession of barely subscribed German covered bonds that had been issued over the past six weeks.

The bank for Germany’s medical profession may be small, but it is very well capitalised, its rarely issued covered bonds are highly overcollateralised, and the top rating is exceptionally well protected. The bank is due to start roadshowing from Friday.

This week’s two largest covered bonds, from Nordea and DNB Boligkreditt, have performed well, with investors actively lifting offers on Wednesday. And with the European Central Bank expected to take an accommodative policy stance at next week’s meeting, the near term outlook is looking good from both the investor and issuer perspectives. Further issuance is expected on Thursday and early next week.

Berlin Hyp has mandated leads for its third covered bond of the year but its first with a five year maturity.

Korea’s Kookmin Bank has opened books for the first legally enshrined Korean covered bond. The transaction, which follows programme upgrade to triple-A from both Moody’s and Fitch, will be in dollar fixed rate format and is expected to offer a moderate spread pick up to where Royal Bank of Canada issued a five year deal last week.

The German covered bond market is set for expansion, with the little known Deutsche Apotheker- und Ärztebank appointing leads for a roadshow. At the same time, another small German covered bond issuer, Pforzheim Calw, opened books for a sub-benchmark sized deal to be priced Wednesday.

Raiffeisenlandesbank Niederösterreich-Wien AG issued a €500m long five year covered bond on Tuesday and despite its attractive new issue premium, which led to a repricing of the issuer's curve, the deal was only moderately oversubscribed.

Caisse Francaise De Financement Local (Caffil) did well to raise €1bn for its fifth benchmark of the year. And by not squeezing the last basis point it managed to get the first properly oversubscribed deal of its last three.

DNB Boligkreditt issued its first euro-denominated deal of the year which, by virtue of not being eligible for CBPP3, was priced attractively and drew a deep pool of demand from broad range of investors.

Caisse Francaise De Financement Local (Caffil) has mandated leads for seven year covered bond, its fifth euro benchmark of the year. The announcement caused dealers to mark French covered bonds a little wider and suggested that, while market conditions have improved from last week, they are still a bit shaky.

Bank of Ireland returned to the euro covered bond market for the third time this year to raise €750m on a comfortably oversubscribed book. Though cheap by historical standards, the hefty new issue premium left some unconvinced about the market outlook.