Euro

Crédit Mutuel Arkéa priced its second public jumbo covered bond on Wednesday, taking advantage of demand for duration. Although the borrower has only one deal outstanding, it is becoming increasingly well recognised. Investors are likely to have taken comfort from its intention to transfer to the new Sociétes de Financement de l’Habitat framework.

French, UK and German names were active on Wednesday, continuing the shift away from southern jurisdictions. Lloyds launched its second euro deal of the year and Nordea became the latest borrower to tap the dollar market. UniCredit ensured peripheral Europe was represented, mandating for a Eu500m tap of an outstanding 2017 trade.

Taking advantage of scare supply at the long end and a rising yield environment, ABN Amro raised Eu2bn of 10-year funding on Tuesday morning. The transaction was priced well inside guidance on a comfortably oversubscribed book, in which there was little price sensitivity.

Deutsche Hypothenkenbank priced its first Eu1bn print in almost five years and its first public sector backed deal since 2005. Despite rarity appeal, the bond was priced at the wider end of guidance, illustrating price sensitivity among large German accounts.

Deutsche Hypothekenbank Hannover is set to price a public sector backed Pfandbrief this afternoon, following NIBC’s first public deal which was priced at the end of last week. The book build on both northern European deals has been seamless, despite further volatility and credit rating concerns around peripheral Europe.

Latest figures from Dealogic show how much covered bonds have increased in importance to the detriment of the senior FIG market. The data provider said on Monday that global covered bond issuance reached $157.8bn in the first quarter, the highest quarterly volume on record. Volume was boosted by a 37% increase in the number of jumbo covered bonds as volume and deal count reached new records.

Covered bond secondary market levels have remained largely unaffected by Moody’s downgrade of 18 Spanish covered bond programmes on March 25, which followed a downgrade of the borrowers’ issuer ratings. Although all the downgraded institutions remain under review, or on negative outlook, market traders said the immediate effect of the cuts has been negligible.

The Netherlands NIBC Bank brought primary market activity to a close this week, launching an inaugural Eu500m three-year deal on Friday via leads LBBW, Natixis, and RBS, which priced the new issue at 105bp over mid swaps.

Axa Bank Europe sold its second ever covered bond on Tuesday, a tightly priced Eu500m five year deal.

Caja Madrid became the latest Spanish name to come to market on Wednesday, though it did not enjoy the tight pricing of its compatriots. Its Eu750m three year cédulas hipotecárias came in the wake of twin Spanish deals from Banesto and BBVA on Monday, which priced inside initial guidance.