Euro

Norddeutsche Landesbank could open books on a debut dollar covered bond as early as Tuesday morning, said syndicate leads on Monday. But the outlook for a first sterling trade from Deutsche Pfandbriefbank is more uncertain.

DexMA, the French local authority funding entity, has told The Cover that it will return as an Obligation Foncière issuer next year, after it is sold, subject to European Commission approval, to a group of shareholders, including the French State, La Banque Postale and Caisse des Dépôts. This follows the news that its former parent, the troubled Belgian issuer Dexia, has now fully complied with EC requirements to offload subsidiaries, after the sale of its Luxembourg unit, following earlier disposals of its Turkish and RBC Dexia businesses.

Covered bonds are highly liquid instruments and should be eligible for the top level of Basel III’s Liquidity Coverage Ratio, according to the European Covered Bond Council.

Despite growing concerns that a Spanish bad bank will cause collateral pools to shrink, there is a growing sense of confidence that real money Cédulas investors will not become forced sellers as bonds hold the investment grade rating threshold and the ECB dampens systemic risk fears.

With peripheral concern resurgent, covered bond investors are looking for safety. But having grown tired of exceptionally tight core levels they are also in search of spread. Nordic issuers are best placed to offer them both and should be taking advantage of the primary while they can, said syndicate bankers.

Deutsche Hypothekenbank found demand lacklustre for its seven year mortgage Pfandbrief on Tuesday, with even domestic buyers proving reluctant to participate.

Markit is expected to unveil a new tradable liquid covered bond index in October or November. Though it may not necessarily be actively traded, it should provide a more useful measure than the existing index, as it will help investors to gauge more closely their performance in relation to the most relevant parts of the covered bond market.

Deutsche Hypothekenbank Hannover mandated for its second benchmark covered bond of the year on Monday. The borrower is expected to price the seven year mortgage backed trade on Tuesday, taking the number of deals in that maturity year to date to almost double that of 2011.

Spain’s CaixaBank launched a novel covered bond tender offer on Friday. The borrower will buy back at par up to €2.11bn of floating rate bonds from retail clients but participating bondholders must keep the funds in a new deposit account for at least a year after the exchange.

Sampo Housing Loan Bank brought its first benchmark covered bond in almost a year on Thursday, pricing a successful €1bn no-grow jumbo trade.

Sampo Housing Loan Bank on Wednesday mandated for the sixth seven year covered bond benchmark of September, and should price the trade on Thursday. Despite a renewed appetite for risk in the wider market, covered bond supply remains consigned to safer names, but a successful auction for the Spanish sovereign could pave the way for further Cédulas.

BPCE mandated leads for a February 2018 covered bond on Tuesday. And though others borrowers are in the pipe, activity is not expected to be as busy as last week.