Europe

Credit Suisse has published a consent solicitation in which it proposes changing the maturity of its outstanding covered bonds from a hard bullet to a soft bullet. Though the market does not price for this difference, the issuer is willing to pay investors five cents to agree to the change.

Wienerberger, the world’s largest brick maker, has replaced two lines of credit with a €400m five year revolver.

UniCredit Italy has revitalised hopes for the conditional pass through (CPT) covered bond structure which was pioneered by NIBC over a year ago and was at risk of being ignored. The programme lowers asset encumbrance, improves access to funding and can be used to fund a broader range of mortgage assets with full preferential regulatory treatment. It should send a strong signal to other issuers across Europe, but especially those in Spain where an overhaul of the legal framework is on the table.

The covered bond market had a watershed moment on Friday when OP Mortgage Bank launched its 10 year. Despite an attractive spread, the deal was unable to get the sort of traction that the issuer may have hoped for. It was no coincidence that as books opened, ECB president, Mario Draghi, raised the prospect of full scale sovereign quantitative easing — something that is likely to make covered bonds look relatively expensive to government bonds.

Crédit Agricole priced the year’s largest deal from a European financial issuer in samurai format on Thursday, raising a total of ¥135.5bn ($1.15bn) from a four-tranche, fixed-floating rate transaction.

Covered bond spreads continued to fall in the primary market as Belfius Bank and Landesbank Hessen-Thueringen Girozentrale (Helaba) issued benchmark euro deals at record low funding levels on Thursday. The German issuer provided the Bundesbank with its first opportunity to purchase a benchmark domestic deal.

A newly proposed legal framework for the Spanish Cédulas market could lead to less overcollateralization, which would in turn lead to downgrades of at least one notch, said Fitch on Thursday. But the introduction of a 12 month liquidity facility could lower the mismatch risk between assets and liabilities leading to a one notch rating improvement, the agency added.

Publicis Groupe’s $3.5bn loan for acquisition of Sapient will have 10 relationship banks, led by Citigroup. Some banks with which Publicis previously had a banking relationship with are missing from the list.

Crédit Agricole returned to the covered bond market for the first time this year to issue a €1bn eight year. Demand as fair, but less spectacular than deals seen two weeks ago, as the agency and sovereign sector now offer better value. Leads stressed the quality of real money interest, a large portion of which is likely to have been from the Banque de France.

It is a truth universally acknowledged that the important parts of any financial conference typically take place off the stage rather than on it.

The covered bond market has started to lose some of the energy and excitement that followed the announcement of the European Central Bank’s purchase programme. As the bid for Santander’s Cédulas widened the day after launch on Thursday, BPCE issued a finely tuned deal that was sized closely to demand.

Santander returned to the covered bond market on Wednesday after a 21 month absence with a dual tranche offering that included a 20 year tranche, a duration that has not been seen from a Spanish issuer for at least five years, and which responds to unsated demand from insurance firms.