Euro

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.

Nordea Finland returned to the covered bond market on Monday to issue a €1.25bn seven year. In contrast to other recent deals, the transaction attracted solid demand of over €2bn from a wide range of investors and sets the stage for follow-on issuance.

The primary market is expected to pick up next week as a number of issuers will have finished roadshows and core issuers, possibly including some Nordic names, will return. Though dealer inventories are still high, they are falling thanks to improved central bank purchases which have helped to stabilise spreads.

Bank of Scotland is planning to make its return, after four years of absence, to the public UK RMBS market with a deal denominated in three currencies. Its parent company, Lloyds, has issued four covered bonds this year in sterling and euros.

Moody's has assigned a provisional A3 rating to the conditional pass-through covered bonds of the good bank carved out of Banco Espirito Santo. A second rating could follow, and may potentially presage a deal.

SumitG, a triple recourse programme sponsored and guaranteed by Goldman Sachs Group and Sumitomo Mitsui Trust Bank, will be backed at first entirely by senior tranches of European and Japanese RMBS. Over half of the collateral will be rated triple A, and none of the bonds are below A minus. Despite this the deal gets no rating benefit from the collateral pool.

The secondary market began to stabilise on Wednesday, with sentiment improving following a rally in subordinated bonds, and covered bonds seeing marginally better central bank buying. Though dealer inventories are high, the improvement in relative value compared to sovereign bonds bodes well for the market’s longer term performance.

Münchener Hypothekenbank (MuHyp) achieved a typically tight spread for its €500m six year mortgage-backed Pfandbrief on Tuesday. But market conditions did not support a return to the heights of their last deal in July, one of the tightest deals to have priced this year.