Euro

The hectic pace of issuance in the covered bond market was maintained today (Tuesday), with three new deals following four yesterday, but issuers had to make do with smaller sizes and wider spreads.

Münchener Hypothekenbank achieved easily the tightest spread of four issues yesterday (Monday), selling a Eu1.25bn five year mortgage Pfandbrief at 8bp over mid-swaps, following guidance of the 9bp area.

A Eu1bn five year issue from OP Mortgage Bank was the most popular covered bond on offer yesterday (Monday), attracting Eu2bn of orders in less than half an hour.

Confident of investors’ appreciation of changes it has made to improve its credit profile, Swedbank Mortgage yesterday (Monday) at short notice launched a five year benchmark transaction without any deal-specific preparation, the issuer told The Cover.

The primary covered bond market is expected to be very busy next week, with mandates for Münchener Hypothekenbank and OP Mortgage Bank announced this (Friday) morning said to be only the first of many due to emerge in the coming days. Meanwhile, France’s CM-CIC snuck out a deal today between a German public holiday yesterday and US non-farm payrolls today.

BNP Paribas priced the biggest benchmark covered bond since the middle of April yesterday (Wednesday) to wrap up the busiest day in the market since then, with Sparebanken Vest and Dexia Kommunalbank Deutschland also taking half a yard each out of the market.

Three issuers launched euro covered bonds this (Wednesday) morning ahead of a public holiday in many parts of Germany tomorrow, with market conditions said to be better than yesterday, although still weak. Meanwhile, the US market could see its first new covered bond supply since mid-April.

France’s Credit Mutuel Arkéa this (Tuesday) morning launched an inaugural public covered bond, marketing a Eu500m minimum issue at a spread wider than some had anticipated in a difficult market.

GCE Covered Bonds will price the first covered bond of Eu1bn or more in five weeks this (Thursday) afternoon, a four year issue at 40bp over mid-swaps that one banker described as “a first glimmer of hope”.

The European Central Bank said yesterday (Monday) that purchases under its Securities Markets Programme that had settled as of last Friday (14 May) totalled Eu16.5bn, dwarfing activity under its covered bond purchase programme.

Barclays Bank plans to issue registered covered bonds off its Eu35bn global covered bond programme, the UK bank announced today (Tuesday).

Deutsche Hypothekenbank yesterday (Monday) achieved its goal of reopening the covered bond market and, according to its leads, did so without having to pay for the privilege.