Euro

Crédit Agricole SCF returned to the covered bond market for the second time this year with its second ever public sector backed deal. The €1bn 10 year transaction priced through the OAT, which was the first time in the history of the French covered bond market.

The Bank of international Settlements has suggested that local regulators may seek to limit the level of balance sheet encumbrance by linking it to the level of capital that a bank needs to hold.

Belfius Bank on Tuesday followed the footsteps of KBC bank, mandating and launching a seven year mortgage backed covered bond with pricing being closer to its Belgian peer than any previous funding. Deutsche Pfandbriefbank also reopened its March 2020 for an attractively priced €250m tap.

Holidays in Germany and the UK next week shrink the issuance window but covered bond bankers still expect benchmark deals. A seven year tenor makes for simple execution, but Deutsche Pfandbriefbank’s (Pbb) 15 year bond has captured issuers’ imaginations, said syndicate officials.

Deutsche Pfandbriefbank (Pbb) returned to the public sector Pfandbrief market in style this week. It extended the German covered bond curve with an impressive 15 year deal and plans to issue at least one public sector backed bond a year, it told The Cover.

Speaking to The Cover on Thursday, SEB’s head of treasury management John Wang emphasised the granularity of the book for the bank’s inaugural dollar trade that was launched on Tuesday.

WL Bank priced a €500m seven year Pfandbrief almost flat to mid-swaps on Thursday, to the surprise of some syndicate bankers on the deal.

Deutsche Pfandbriefbank launched the longest German Pfandbrief in nine years on Wednesday, pricing a €500m 15 year deal. The potential for more ultra-long dated deals is limited, but Pbb’s success in an unusual tenor illustrates just how flexible desperate investors have become, said bankers.

Rare issuer WL Bank has picked banks to manage its latest Pfandbrief and is aiming to launch a seven year euro denominated bond as early as Thursday, said bankers.

Santander UK has announced a new deal from its Holmes master issuer RMBS shelf. The prospective deal is likely to offer a significant spread pick up compared to UK covered bonds. And Rabobank has privately placed RMBS issuance from its Obvion subsidiary.

A sharp increase in primary supply is unlikely to appear and save the covered bond market from a dire lack of secondary liquidity, but there are other solutions, bankers told The Cover on Monday. The European Central Bank holds more than €60bn in covered bonds and releasing some of these into the secondary market would ease the pain, they said.

The covered bond market is open for almost any issuer and though its unlikely that activity will pick up quickly, there are a number of potential transactions expected in the coming weeks, bankers told The Cover on Monday.