Euro

After the pricing of Helaba’s Eu1bn 5 year no grow and Crédit Agricole’s $1.5bn 3.25 year, SBAB’s Swedish Covered Bond Corp is in the market on Thursday with a Eu1bn no grow five year. From here on issuance could start to fall — as a number of factors conspire.

After failing to get a six-year cédulas away earlier this the week, La Caixa successfully priced a five year deal on Tuesday. The eventual transaction, which saw two leads replaced, illustrates that, despite an improvement in fortunes for Spain generally, investor demand is clearly focused on the short to medium part of the curve for peripheral names; anything longer becomes much more price sensitive.

La Caixa returned to market on Tuesday, after postponing a six year cédulas trade on April 5, amid claims the deal struggled to gain traction on the basis of an over-ambitious spread whisper.

Abbey National was the sole benchmark covered bond issuer on Thursday, becoming the first repeat visitor to the sterling space this year, though other names are also expected to return. The comfortably oversubscribed £1.25bn 10 year print enjoyed strong participation from foreign investors, yet another encouraging sign of the sterling market’s growth.

The asset backed security market showed signs of recapturing some of its old swagger this week, playing host to a wide range of transactions and preparing to take down the largest volumes since the onset of the credit crisis in 2007.

Compagnie de Financement Foncier priced a difficult Eu1bn 10 year deal on Wednesday, with market participants divided as to why the deal struggled. The jumbo benchmark was priced in line with ambitious guidance, though the slow book build was unexpected in a market primed for long dated paper from a high quality French name.

Record covered bond issuance almost reached parity with senior unsecured issuance in the first quarter of 2011, a trend that is unlikely to be reversed by demand constraints on the product, said bankers this week. But widening spreads between the products could put the brakes on.

A quartet of 10 year trades was launched this week, with ABN Amro, Crédit Mutuel Arkéa Skandinaviska Enskilda Banken, and Eurohypo all tapping the long end of the curve. While ABN Amro and Crédit Mutuel Arkéa executed successful trades which have since performed well in the secondary market, Germany’s Eurohypo priced just inside Sweden’s SEB on Friday. One syndicate official said the outcome may signal a new chapter for covered bonds.

Dual 10 year deals were launched on Thursday, with Skandinaviska Enskilda Banken and Eurohypo the latest names to answer demand for long dated paper.

Amid renewed supply from core issuers, and ratings pressure on peripheral jurisdictions, Kutxa (Caja de Ahorros y Monte de Piedad de Gipuzkoa y San Sebastián) launched its second ever standalone benchmark deal on Thursday.

Lloyds TSB Bank convinced 135 accounts to participate in a comfortably oversubscribed Eu1.75bn five year issue on Wednesday, which was priced 5bp inside of guidance. Covered bond traders report, however, that the bonds have widened in the secondary market, with other issues this week also underperforming.