Euro

Following its recent roadshow, Deutsche Apotheker- und Ärztebank eG has mandated leads for a €500m no grow Pfandbrief.

Mediobanca issued a smaller than usual deal on Tuesday enabling a higher level of oversubscription than many recent Italian covered bonds with a concession that was towards the lower end of the range.

Yorkshire Building Society offered a chunky premium for its €500m of seven year covered bond on Tuesday. With only a modest oversubscription, it was not able to tighten pricing.

Aegon Bank, the subsidiary of the Dutch Globally Systemically Important Insurer Aegon, has set up a €5bn conditional pass through (CPT) covered bond programme that is registered with the Dutch central bank. A triple A-rated transaction is expected this year.

Westpac has mandated leads and opened books for a dollar benchmark covered bond, to be priced on Monday. And in euros, Yorkshire Building Society (YBS) has mandated leads for a €500m no-grow seven year benchmark, to be launched on Tuesday.

The covered bond primary market is likely to experience an increase in activity next week, with a handful of deals expected. Though conditions are broadly constructive and have improved from two weeks ago, the secondary market still looks precarious suggesting issuers that move early will have an advantage.

Fitch will soon release an exposure draft focused on its treatment of foreign exchange (FX) risk in covered bond programmes with open FX positions, along with a number of other proposals that seem positive for covered bond ratings.

NordLB Luxembourg Covered Bond Bank issued a €500m three year Lettres de Gage Publiques on Thursday. The deal offered a 24bp premium to where NordLB Germany trades, and therefore attracted a comfortable level of oversubscription despite its lack of compliance with the capital requirements directive (CRD) covered bond definition and its split rating.

Covered bond ETF outflows are on course to reach their highest level in five years even though spreads are at their most attractive for over a year, according to Markit. However, the spread widening should ultimately attract investors that have been lost over the past year.

Banco Sabadell attracted exceptionally strong demand for its second covered bond of the year. Higher-rated Cédulas have rarely offered a spread over Spain since 2011, but this deal did, which made all the difference.

Skandinaviska Enskilda Banken (SEB) issued a €1bn seven year Swedish covered bond on Monday and attracted enough interest to tighten pricing, something that few issuers were able to do recently. However, even with double the concession DNB paid, the Swedish borrower attracted much less demand than the Norwegian one. SEB’s curve has been marked 2-3bp wider following the deal.

TSB Bank is in the market with Duncan 2015-1, its first UK prime RMBS which is a securitization of legacy assets inherited from Lloyds Bank. Meanwhile Belfius will soon be ready to move ahead with Penates 5 which has a special interest rate cap that replaces the swap and reduces rating agency induced counterparty risk.