Euro

BayernLB yesterday (Monday) tapped the covered bond market for a Eu1bn public sector backed Pfandbrief via joint leads BayernLB, Crédit Agricole, DZ Bank HSBC and SG. The 2.75% July 2016 priced in line with mid swaps plus 12bp area guidance on a modestly oversubscribed order book and particularly benefited from strong foreign investor demand.

The focus of attention today is on Dexia MA which is expected to price a 10-year Obligation foncières this afternoon in line with guidance of mid swaps plus low 100bp area through joint leads Crédit Agricole, Dexia, DZ, and SG.

Fitch yesterday (Monday) downgraded the issuer ratings of five Greek banks from BBB- to BB+ and removed them from negative review, though the outlook on the long term ratings is negative.

Banco Popolare Societa Cooperativia launched a Eu700m three year obbligazioni bancarie garantite yesterday (Monday), following Intesa Sanpaolo’s successful reopening of the Italian covered bond market last week. Although the deal had all the hallmarks of success, there is an increasing concern that investors now have so much high yield choice from top-tier names that second tier institutions, like Popolare, risk being crowded out.

Leads could not afford to take any risks with the pricing of Intesa Sanpaolo’s Eu1.5bn 10-year last week and therefore opted, for what some believed, was an overly generous price. But with an eye on the long line of local issuers that plan to follow it, leads and the issuer had to price the deal responsibly –for the benefit of the Italian market as a whole.

After a busy close to last week, covered bond activity has followed through this week with Abbey, Dexia MA and Westpac announcing deals while active bookbuilding commenced on Abbey, Banco Populare and Bayern LB.

Bayerische Landesbank has mandated BayernLB, Credit Agricole, DZ, HSBC and SG for a July 2016 public sector jumbo Pfandbrief.

Spain’s Bankinter has priced a Eu500m, no grow, two-year cédulas hipotecárias at 310bp over mid-swaps which, though inside 315bp area guidance and a 320bp price whisper, was the widest primary print for any Spanish issuer on record.

Intesa Sanpaolo launched a Eu1.5bn 10 year obbligazioni bancarie garantite today (Friday), the first Italian issue of the new year, and one of the most heavily oversubscribed deals of the last two weeks.

Two Swedish transactions appear to have gone smoothly, underscoring in one syndicate banker’s view the “safe haven bid for anything Scandinavian”.

Fitch yesterday (Wednesday) downgraded mortgage backed covered bonds issued by Caja de Ahorros de Murcia from AAA to AA, and removed them from negative review, following its downgrade of Caja Murcia’s issuer rating from A+ to BBB+.