Euro

The mortgage cover pool backing Aareal Bank’s Pfandbriefe is expected to grow by roughly a fifth following its integration with the assets originated by Corealcredit, according to Commerzbank research analysts. The German exposure will rise, as will the proportion of residential loans.

UniCredit Czech Republic and Slovakia has returned to the covered bond market after first roadshowing in November. The bank has mandated two leads this time round and will be hoping to capture an international investor base with the first covered bond to be backed by a mix of Czech and Slovakian mortgages.

Sparebanken Vest Boligkreditt priced the first Norwegian covered bond of 2015 flat to its existing curve on Wednesday. The deal illustrates that rare issuers from core regions are still able to get superb execution despite the more skittish tone in credit markets lately.

KBC priced its second €1bn covered bond of the year on Wednesday, this time opting for a 2021 which fits neatly into the borrower’s maturity profile and dips into mid-swaps negative territory for the first time. The deal also priced almost flat to its curve.

Van Lanschot Bankiers printed its inaugural conditional passthrough covered bond on Tuesday. A good quality book and a well flagged deal helped the issuer price flat to NIBC’s recent trade. Bankers said it paid a minimum market entry premium to make a successful debut.

Van Lanschot Bankiers is expected to open books on Tuesday for its inaugural conditional pass through covered bond. The first Norwegian deal of the year could be announced soon. Meanwhile Berlin Hyp is on the road with its Green covered bond.

Northern Rock Asset Management (NRAM) announced on Monday that it expects a meeting, to be held in relation to a previously announced covered bond tender offer, to be quorate.

Deutsche Pfandbriefbank (pbb), the German Pfandbriefe issuer that will be privatised this year, said it expects to make a first quarter profit of €45m, even after writing down 50% of its exposure to Heta Asset Resolution.

Covered bond supply surged this week with investors piling into deals that offered little new issue concession and negative spreads, leading to concern that an inflection point was at hand. However, there was no sign of investor pushback, with the tightest deals from core European issuers experiencing a high level of demand. But some bankers were left wondering just how long the superb conditions would last.

Covered bond yields and spreads are spiralling lower and the prospect that wafer thin margins become even tighter has led to a legitimate concern that a turning point may follow. But with the European Central Bank backstopping everything, and the market still offering a decent return compared to Bunds, covered bond investors should be lining up to buy for some time yet.

French covered bond regulations that improve transparency on asset liability mismatches and liquidity tests will not be made public, but they should improve supervisory oversight and lower refinancing risk for investors, said Moody’s on Friday.

Toronto-Dominion Bank smoothly executed the sixth seven year euro covered bond this week despite a Bloomberg blackout delaying the process. The larger than usual €1.25bn deal offered a decent new issue premium and attracted comfortably oversubscribed book.