Europe

Berlin-Hannoversche Hypothekenbank (BHH) mandated leads to market the first green pfandbrief, or Grüner Pfandbrief, setting the stage for further green covered bonds and RMBS due this year and next. In contrast to last year’s environmental and social governance deal from Münchener Hypothekenbank, the forthcoming transaction will be of benchmark size and will be backed exclusively by energy efficient buildings.

The German issuer mandated joint leads for a seven year €500m no grow mortgage backed Pfandbrief on Friday for likely issuance on Monday.

The Bundesbank and European Central Bank have been actively lifting offers in Austrian covered bonds, with all bar one credit performing strongly since the end of March.

Magyar Nemzeti Bank (MNB) — the Hungarian central bank — is planning to buy RMB-denominated bonds for its official holdings.

Berlin Hypothekenbank has mandated joint leads for a European roadshow to market the first Green Pfandbrief.

A pickup in primary market activity continued apace on Wednesday when Stadshypotek sold the sixth dollar denominated covered bond in the US this year.

The spread between the weakest and strongest covered bonds is tighter than at any point in the last five years, thanks to the European Central Bank’s backstop bid. But just because the ECB is willing to buy anything and everything that qualifies as a covered bond, that doesn’t mean investors should.

At the end of April Standard & Poor’s will roll outs its new multi Cédulas (MC) rating methodology. It expects 40% of deals it rates to be downgraded two to three notches and 40% to be upgraded about two notches. At the same time it will implement its European commercial real estate (CRE) rating criteria, which will result in 10% of covered bonds with commercial real estate in the pool being downgraded by one notch and no upgrades.

The Austrian state of Carinthia announced that it will provide a line of liquidity support to Austria’s Pfandbriefstelle. The decision suggests a slight improvement in the negative political backdrop dominating Austrian banks. Despite continued concerns, the recent sell-off has thrown up relative value opportunities, said analysts.

HVB returned to the covered bond market for its first and only mortgage-backed covered bond benchmark of the year on Tuesday and enjoyed a solid reception. The choice of tenor, deal size and timing all played important roles in the deal’s success.

The decision to remove Heta exposure from Pfandbriefe collateral pools and add substitute assets has strengthened the position of investors and has demonstrated the importance that the German banking industry places on the reputation of the Pfandbrief product, said Moody’s on Monday.

Sentiment improved across the board on Monday, and especially in the covered bond market where Commerzbank issued an oversubscribed seven year tap which it increased from the minimum size during bookbuilding. The increase made a stark contrast to last week’s deals and suggests scope for another transaction on Tuesday. Despite a very supportive technical backdrop, the second quarter outlook is less certain with concern over Greece set to mount, said bankers.