Euro

There were fears that investors had hit their country limits for Ireland earlier this month, when AIB Mortgage Bank’s five year covered bond drew a lukewarm response. But Bank of Ireland disproved this on Wednesday by pulling in a big oversubscription for the longest maturing Irish covered bond issue since the sovereign crisis.

Banca Popolare Dell'Emilia Romagna Società Cooperativa, has mandated leads for a covered bond roadshow in the wake of the Federal Reserve’s surprise decision not to taper its bond purchasing programme. The Fed’s unexpected move should support spreads and issuance, especially for borrowers like the Italian bank that offer high yields, said bankers.

Two successful covered bond deals from issuers in New Zealand and Austria have illustrated that borrowers cannot take investors for granted and should respect both investors’ wishes and the advice of their lead groups.

ANZ New Zealand and Kommunalkredit Austria are poised to price €500m five year covered bonds. Both deals have gone without a hitch, with oversubscriptions from a broad range of investors. However, given the lacklustre performance of other recent deals, leads were cautious on pricing and offered attractive spreads.

This week’s French covered-bond supply was the highest in the year so far as three issuers collectively raised €3bn on demand of €5.5bn over nearly 300 orders. Though the sell side predictably claimed all deals were a success, investors conspicuously exercised a high level of discrimination.

NIBC’s pass-through covered bond, which has been successfully registered with the Dutch central bank and will be compliant with CRD and Ucits, should attract investors, according to ABN Amro research. But they could have to wait an extra four years to be repaid if the pass through is triggered, a level of uncertainty that should be manageable said the analysts.

BPCE has raised €1bn, avoiding paying a new issue premium while funding well inside levels that prevailed even a month ago. But with volatility likely to rise and more supply expected, investors have been careful not to inflate their orders, which will be filled in full.

Standard & Poor’s and Fitch have both assigned top ratings to NIBC’s conditional pass-through covered bond. The issuer has privately placed a small amount of bonds and is expect to publicly distribute them, according to S&P.

Sparebanken Vest Boligkreditt (SVB) returned to the covered bond market on Wednesday, after more than 18 months away, issuing a no grow €500m five year that was priced flat to its outstanding curve.

Bank Austria has tapped an outstanding five year by less than the maxmum it had targeted. But leads did not think any conclusion could be drawn from this.

Credit Mutuel CIC and AIB Mortgage Bank both launched covered bonds on Tuesday. The French transaction offered a larger new issue premium and attracted greater demand, but this came from a much narrower range of investors than the Irish deal, which larger investors spurned due to country limits.

Banco Popular Español returned to the covered bond market for the second time this year and reduced its reliance on retained issuance to bring a four year Cédulas, that was increased from €500m to €750m. Despite being barely oversubscribed and overly reliant on the domestic bid, the book was granular.