Euro

Deutsche Hypothekenbank this (Monday) morning reopened the covered bond market after more than three weeks without any sizeable issues. Market participants welcomed the deal, but suggested that it was not representative of the wider situation in the market.

Moody’s put seven Portuguese covered bond programmes on review for downgrade yesterday (Wednesday) after taking the same action on the sovereign and then 10 rated Portuguese banks.

*Change relative to 31 March 2010

Fears of losses resulting from any Greek government debt restructuring panicked markets yesterday (Tuesday) after Standard & Poor’s downgraded Greece from BBB+ to BB+, on negative outlook, making it the first member of the euro-zone to have its debt cut to junk status.

At least two issuers are said to be preparing covered bond issues for next week, assuming markets have settled after heavy peripheral spread-widening, with others due to proceed with roadshows that had to be put on hold because of the recent disruption to air travel.

Caisse de Refinancement de l’Habitat and Dexia Kommunalbank Deutschland launched Eu500m five year covered bonds this (Thursday) morning.

La Caixa built a modestly oversubscribed order book for a Eu1bn three year public sector-backed deal yesterday (Tuesday) that has been the only benchmark covered bond issuance so far this week, with the pace of supply slowing markedly in comparison with previous weeks.

La Caixa launched a three year public sector covered bond this (Tuesday) morning at levels wider than those discussed last week to take into account an underperformance of Spanish government bonds since then. Only one publicly announced mandate remains in the pipeline, with volcanic ash potentially disrupting preparations for further supply.

Settlements of Iberian issues last Friday (9 April) and yesterday (Thursday) coincided with the only above average reports of covered bond purchases this week, as a brief slowdown in eligible issuance ahead of the Easter weekend kept the European Central Bank’s tally down in the interim.

Intesa Sanpaolo yesterday (Thursday) launched the first benchmark off its public sector covered bond programme, a Eu2bn seven year deal that surpassed the size initially targeted by the issuer, and will now focus on readying a mortgage-backed programme for issuance in the coming months. Meanwhile, Caisse de Refinancement de l’Habitat added Eu800m to a 3.75% 2020 issue and La Caixa today announced a mandate.

Intesa Sanpaolo has launched its inaugural covered bond, a Eu2bn seven year Italian public sector deal that will be priced at 50bp over mid-swaps, in line with guidance, later today (Thursday). Meanwhile, France’s Caisse de Refinancement de l’Habitat has reopened a 2020 issue and Spanish savings bank Caja Murcia is on a roadshow.

Helaba yesterday (Wednesday) priced a Eu1bn seven year public sector Pfandbrief issue flat to agencies after building an order book that was more than five times oversubscribed. The issuer told The Cover that its return was prompted by a convergence of spreads available in the international and domestic markets.