Euro

Despite a UK holiday syndicate bankers are not ruling out deals on Monday, and there are still borrowers eager to execute bonds in run up to summer, they said.

Turkey’s Denizbank is expected to price its SME covered bond within the month and there are hopes other issuers will follow. While the SME product is unlikely to be seen as anything other than niche, there are strong expectations that at least four borrowers will launch euro denominated mortgage backed deals in benchmark size.

Australia and New Zealand Banking Group slipped in a successful euro benchmark covered bond on Thursday morning ahead of the European Central Bank’s rates decision. The borrower returned to euros for the first time in over a year and closed the tightest covered bond yet from an Australian issuer.

Bankinter’s latest €500m tap this week came with a tighter spread and drew more international accounts than the borrower has managed with any benchmark deal in recent years. As its issuance costs drop its loan portfolio is becoming profitable, and though it remains barred from the senior unsecured market, comfortable covered bond funding costs and foreign demand are steps in the right direction, a funding official told The Cover.

Moody’s has downgraded Italy’s Banca Carige and will turn its attention to the issuer’s covered bonds, which traders expect to come under selling pressure in the secondary market.

Sweden’s Länsförsäkringar Hypotek returned to covered bonds on Monday, after almost two years away from the market. Its rarity and top quality collateral ensured conclusive investor endorsement, despite competing Spanish supply.

Core issuers planning benchmark covered bonds are eyeing the euro and dollar markets, said bankers on Friday. And although the peripheral rally has slowed, the prospect of an ECB interest rate cut should help support appetite for southern European supply.

Swedbank Hypotek wasted little time in moving from blackout to benchmark this week, and launched its first euro jumbo covered bond since 2011 on Thursday. Other Nordics are emerging from reporting periods and at least one also has an eye on a euro transaction, said bankers.

The shipping crisis will last longer than expected and is keeping German banks in particular under pressure, Fitch said on Thursday.

Moody’s downgrade of Commerzbank and Hypothekenbank Frankfurt (Hypfra) will leave Commerzbank’s covered bonds unscathed but push Hypfra’s public sector bonds down to Aa2, analysts said on Wednesday.

Sparkasse KölnBonn returned to covered bonds in style on Tuesday, breaking through into the single digits over mid-swaps for its first benchmark deal in five years.

Hard work rather than a change in terminology led to the surge in interest for Nykredit Realkredit’s latest senior secured deal, an official at the issuer told The Cover on Tuesday. Almost 140 accounts produced its biggest order book yet for a senior secured deal.