Euro

After announcing its intention to repurchase all of its series 7 and series 8 2017 covered bonds, Northern Rock Asset Management (NRAM) has set the purchase price on the notes. It is hoping to reduce its liabilities and close its covered bond programme following a successful buyback in March.

Northern Rock Asset Management (NRAM) intends to buy back all of its covered bonds due 2017 which are validly tendered, and was due to set the purchase price on Friday afternoon.

Caisse Française de Financement Local proved the resilience of the covered bond market on Thursday by printing the first euro deal from a European issuer in three weeks. The defensive three year tenor was exactly what the market needed, according to rival bankers, and paves the way for more short-dated euro issuance.

The Bank of Scotland has issued a consent solicitation requesting a switch from hard bullet to 12 month extendable soft bullet maturities for seven of its benchmark deals.

Piraeus Bank has cancelled its covered bonds which, along with all other Greek covered bonds, are no longer eligible for funding under the European Central Bank’s Emergency Liquidity Assistance facility. The move comes after ECB raised ELA collateral haircuts to a rumoured 45% with a warning that it may cut liquidity off completely two weeks from now.

The proportion of residential mortgages in Spanish Multi-Cédulas (MC) has risen, leading to an improvement in their credit quality, Fitch said on Tuesday.

Markets could be facing a protracted period of uncertainty, as a Greek exit from the euro seems more likely after the “No” vote in Sunday’s Greek referendum. The Eurogroup is expected to hold a summit on Tuesday when it will become clear whether or not there is a political will to do a new deal with Greece. Risk aversion should ultimately favour covered bonds, but borrowers will need to price deals cautiously.

As the technical backdrop looks stronger now than at any time this year, issuers should step up and execute funding plans before the Greece crisis gets any worse.

Santander has issued European covered bonds from Spain, Portugal and UK but could soon be about to issue Obligations Foncières from a new French programme. However, the sub benchmark sized deals are likely to be placed with the ECB said bankers.

Italian Banca Monte dei Paschi di Siena S.p.A (Monte) has changed the structure of all its outstanding covered bonds from hard bullet to conditional pass through (CPT). The success of the consent solicitation may encourage others to follow.

Covered bond spreads were tentatively tighter on Friday in the expectation that some sort of deal would be agreed with Greece over the weekend. Parts of the market have repriced and there is scope for selective issuance, but a government bond rally would help.

Polish covered bonds are one step closer and with 90% of members of parliament in support of the new draft, bankers say it is only a matter of time before the proposals become law.