Europe

The head of UniCredit’s CEE division tells Emerging Markets he intends to remain in Russia, despite claims by the head of the country’s sovereign wealth fund that he wants to cut Western banks’ market share by attracting Chinese lenders

Fitch has put the £1.1bn of covered bonds issued by Clydesdale Bank on Rating Watch Negative (RWN) after its parent National Australia Bank said it intended to proceed with a sale of its subsidiary.

The long end of the French, Belgian and Dutch covered bond market is effectively closed for primary issuance because the rout in government bonds has made them too expensive. But bankers are hopeful that, with careful consideration of tenor and pricing, benchmark issuance should eventually return in shorter tenors, though probably not until June.

Kreissparkasse Koeln (KSK Koeln) has named lead managers for an eight year covered bond. The bank has issued two previous covered bonds, but this is the first time it is targeting investors outside of the German savings bank network. The deal is expected in the near future.

Sparkasse Koelnbonn is meeting investors from May 18 for what is becoming its annual €500m bond issue. While the deal will only go live subject to investor feedback and market conditions, bankers are expecting a five to seven year transaction the week after next.

Ålandsbanken is lining up to price a €250m covered bond and is meeting investors in Europe from May 5 – 12. This will be the Finnish bank’s largest covered bond to date.

Hungary is busy positioning itself as the first potential offshore renminbi hub in Central and Eastern Europe. Its central bank, Magyar Nemzeti Bank (MNB), launched an RMB initiative earlier this year to push Budapest's credentials and Daniel Palotai, the bank's executive director for monetary policy, spoke to GlobalRMB about the bank’s plans.

Swedbank returned to covered bonds for its third funding exercise on Wednesday but decided against issuing off its 144A programme to launch in Reg S format for its first dollar benchmark of the year. The decision came as euro rates markets suffered a further bout of intraday volatility following last week’s extraordinary instability. And as Caffil tapped its 35s.

La Société de Financement Local (SFIL), which owns the French public sector covered bond issuer Caffil, has been given approval by the European Commission to originate and refinance large export credit guaranteed loans.

Moody’s said on Thursday that, should Greece leave the euro, investors in Greek covered bonds would still likely receive payments in euros. Given that there are barely any Greek covered bonds held by third party investors, and the fact that the research is predicated on Grexit, the discussion is largely theoretical.

A triumphant first Grüner Pfandbrief has snapped the covered bond market out of its recent decline, bringing new buyers to a product that many investors abandoned this year as the European Central Bank’s purchases crowded them out, writes Bill Thornhill.

Northern Rock Asset Management (NRAM) set the early redemption price for its €2bn 3.875% November 2020s. It is looking to buy back all the notes with a tender offer and consent solicitation and will hold a meeting next week.