Euro

Moody’s increased the refinancing margins and lowered the timely payment indicators (TPI) from very high to high on 12 Danish covered bond programmes on Friday, following a rise in adjustable-rate mortgage loans (ARM) in Danish cover pools.

Borrowers from peripheral and core jurisdictions priced over Eu6bn worth of benchmark covered bonds across three currencies this week, which included inaugural deals from Italian and New Zealand issuers. Prospects for supply next week are similarly diverse, though volatility and European holidays may narrow the window for issuance.

Moody’s cut covered bonds issued by Dutch issuer NIBC Bank from Aa2 to A1, following a downgrade of the issuer’s senior unsecured rating on June 3.

BNP Paribas priced its first public sector covered bond of the year on Tuesday, a well executed five year benchmark. The Eu1bn no grow trade was well oversubscribed, more bonds were placed with Asian accounts than domestic buyers, which a syndicate lead suggested was a first for French covered bonds.

Fitch has downgraded covered bonds issued by Marfin Popular Bank from BBB+ to BBB and kept them on rating watch negative, following a downgrade of the issuer’s default rating on June 1.

Sweden’s Länsförsäkringar Hypotek (LF Hypotek) has finished roadshowing and will come to market early next week. After a successful euro covered bond debut in March last year, the borrower should benefit from some market familiarity and heightened demand for core paper.

After the activity and drama of the first part of the week, Ascension Day holidays across most of Europe have lent a quiet tone to the market and a more sedate close is anticipated. But with as many as five deals mandated and a few others rumoured, the pace is likely to pick up next week.

Caisse Refinancement de l’Habitat on Wednesday added to this week’s sequence of heavily oversubscribed issues from borrowers in core jurisdictions. The Eu1.25bn trade, which was priced through Barclays Capital, Crédit Agricole, HSBC, Natixis and Société Générale, was the second French long 10 year within a week, but investor demand for core paper is so buoyant that the order was still more than twice covered.

UBS made its first appearance in the covered market for over a year on Thursday. The Swiss borrower will price later today a three times oversubscribed Eu1bn five year deal, which a syndicate lead said had achieved the tightest pricing in that maturity outside of Pfandbriefe, since the collapse of Lehman Brothers.

Scandanvian borrowers have joined their French and German core colleagues to take advantage of a market highly receptive to quality issuance. SpareBank 1 Boligkredit tapped the dollar space on Tuesday, while Nordea Bank Finland priced a well oversubscribed three year euro trade on Thursday. Aktia real estate mortgage bank has mandated banks for a series of investor meetings beginning in early June.

Benchmark issuance in the covered market continued for the third straight day on Wednesday, heralding a return to the form of early in the first quarter. Caisse de Refinancement de l’Habitat on Wednesday launched the second French long 10 year within a week, keeping books open for only half an hour for a Eu1.25bn trade.

Dexia Kommunalbank braved a difficult market on Monday to print a Eu1bn 2.75% May 2014 issue. Though not quite as well received as Dexia Municipal Agency’s Obligations Foncières two weeks ago, the benchmark public sector Pfandbrief was priced in line with guidance and enjoyed strong participation from domestic investors.