Europe

Vorarlberger Landes-Und Hypothekenbank (Vorhyp) has mandated leads for a sub benchmark sized mortgage Pfandbrief.

Afren, the Africa-focused oil exploration company listed on the London Stock Exchange, has avoided default on a $300m loan after obtaining a deferral from banks on the $50m amortisation payment that was due on Saturday January 31 for its Ebok debt facility.

Leeds Building Society has priced a £300m three year floating rate covered bond on Monday, as Belfius Bank and BPCE mandated leads respectively for 10 and seven year deals. The primary activity comes as Nordic issuers emerge from blackout, and amid talk that a Swedish 10 year deal could soon surface.

HSH Nordbank returned to the covered bond market on Monday opening books for its first benchmark Schiffspfandbrief in five years. The short maturity, eye-catching spread and heavily overcollateralised pool of low LTV shipping loans suggests the transaction offers compelling value compared to mortgage Pfandbriefe.

Nordea’s redemption of its only remaining hard bullet covered bond on January 30 was credit positive because it reduced the risk of a fire sale, Moody’s said on Monday. All the issuer’s outstanding deals are soft-bullet redemptions.

Lulled into a false sense of security by the European Central Bank’s quantitative easing programme, investors seem to think they are immune from events in Greece. It’s certainly true that markets are in much better shape than they were when the country was first bailed out in 2010. Investors in AIB Mortgage Bank’s latest deal would probably vouch for that.

Erste Bank’s first covered bond in three years issued on Thursday was nearly three times subscribed in less than an hour. The rollicking result showed it was unaffected by mounting concerns in the Austrian bank sector generally, and over its peer Raiffeisen Bank in particular.

After pulling a 10 year deal last year, AIB Mortgage Bank returned to the market on Tuesday to price a very successful seven year. At the same time its Spanish peer, Bankinter, chose to issue in the same 10 year maturity that foiled AIB last year. Both banks achieved a solid result suggesting better quality peripheral covered bond issuers have not been affected by events in Greece.

The larger than expected quantitative easing programme announced by the European Central Bank on Thursday has turbo-charged the well-established bull flattening trend in covered bonds and trading volumes have tripled from earlier in the week. With the long end of French market now offering a tempting spread to OATs, real money buyers are set to return. And with Bonos and BTPs rallying hard, relative value between covered bonds and sovereigns should soon be restored in the Cédulas and Obbligazioni Bancarie Garantite markets.

Restaurant chain operator Wagamama will cancel its banking debt with the £150m senior secured bond it sold on Wednesday, a debut issue for the company.

The Swiss National Bank announced on January 21 that it had received an Rmb50bn ($8.05bn) RMB qualified foreign institutional investors (RQFII) quota. Switzerland is the fourth European country to receive a quota, bringing the full size of the programme to Rmb820bn.

Moody’s upgraded 12 Italian and Spanish covered bonds into “Aa” territory after the close on Wednesday, taking the bonds from category 2A to 1B in the liquidity coverage ratio (LCR). Though this should theoretically improve bank demand, last week’s LCR impact study published by the European Banking Authority (EBA) showed most banks had already met their minimum LCR requirement, suggesting scope for an improvement in appetite will be limited.