Europe
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With new issue premiums set to rise and spreads prone to soften, the covered bond market could be set for a repeat of last year’s spread widening. But this time supply will be more limited, and any move wider won't last.
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Landesbank Hessen-Thüringen (Helaba) priced the third dollar Pfandbrief benchmark of the year and is expected to be followed by a succession of dollar trades later in the year.
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Tullett Prebon has extended its land grab in hybrid voice brokerage across trading classes, with a foreign exchange platform launch this week adding to recent manoeuvres in other areas such as rates and credit derivatives.
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Dovish actions taken by the Bank of England last week, particularly its sterling corporate bond buying programme, helped send short dated credit and equity implied volatility near to their post-crisis lows, prompting traders to begin to roll out of short volatility trades and size up potential bumps in September. -
uarantor: Financial Market Stabilisation Fund of the Federal Republic of Germany
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Akbank will widen the margin on its loan by 25bp if the bank is downgraded. The move is a condition the bank’s relationship lenders required after the attempted coup in Turkey on July 15. While Burgan Bank this week avoided a similar clause, other Turkish banks will likely have to accept them.
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Banks are gearing up to reverse a disappointing year for additional tier one bond issuance. Royal Bank of Scotland and Standard Chartered led the charge this week, and there may be no stopping the turnaround as prices rise and greater regulatory clarity puts investors' minds at ease.
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The rally in sterling covered bonds still has some way to go. With another UK rate cut likely and negligible supply, spreads should at least halve in the next few months.
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The Bank of England’s Gilt buying programme ran into difficulties on Tuesday, securing only £1.12bn — £50m short of its target — despite offering to pay well over market value.
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Last Friday, Turkey managed to cling on to its investment grade status after Moody’s left its credit rating on hold. But with selling pushing the sovereign wider than several countries with lower ratings, bankers and investors are questioning where the money has been moved to.
