Euro

Spain is set to follow Turkey and become the second country with a legal framework for issuing bonds backed by SME loans, according to BBVA CIB research.

ING Belgium made a successful covered bond debut on Tuesday, attracting a heavily oversubscribed order book for the €1bn five year trade.

Bracingly tight spreads for outstanding Pfandbriefe from top tier issuers meant the book build for Landesbank Hessen-Thueringen’s (Helaba) €750m four year bond was quite slow on Tuesday, even after it offered a concession to secondary levels.

ING Belgium will finish its roadshow on Friday and National Bank of Canada is set to emerge from blackout next week, increasing the chances of two or three new covered bond deals next week. Primary market conditions remain strong, despite modest profit taking, said bankers on Thursday.

A successful €3bn share issue from Banca Monte dei Paschi de Siena early next year could bolster the bank’s underperforming covered bonds, RBS research said on Wednesday. It could also lift sentiment for the wider Italian covered bond market, helping other smaller Italian issuers such as Banca Carige, which is also looking to raise capital.

The European Commission has approved the orderly resolution of Crédit Immobilier de France (CIF), according to a statement on Wednesday.

Société Générale SFH returned to the covered bond market on Monday, after nine months away, to issue a €1bn deal due January 2021. It was only its second deal of the year, down from four deals in 2012. With covered bonds becoming increasingly rare, SG was able to attract a solid book from a wide dispersion of investors and price with a modest new issue premium.

Bank of Scotland is to tender four covered bonds denominated in euros and sterling, it said on Monday.

BPCE SFH followed Commerzbank with a 10 year covered bond, but in contrast it offered a very attractive spread to mid-swaps and to OATs and looked set for an eye-catching 2.5% coupon. The deal was announced late in the morning, but it attracted vigorous demand even before the books were open

Sweden's finance minister, Anders Borg may want the country's banks to rely less upon the covered bond market and more upon growing their own deposit bases, but if Swedish banks were to abandon a market that has served them so well for so long, it could do more harm than good.

Bids for core market covered bonds are dwindling, bankers said on Wednesday. However, higher yielding peripheral deals, and all bonds at the long end, remain well supported, though spreads are unchanged.

The transfer of mortgages to UBI’s cover pool increases collateral risk but is mitigated by high overcollateralization, which has increased by even more, Moody’s said on Monday.