Europe

Banco Sabadell returned to the covered bond market for the first time since January 2013 to launch a seven year Cedulas Hipotecarias which priced in line with Credito Emiliano's earlier deal of the same tenor. The deal was less reliant on demand from official institutions than Emiliano and will send a strong message to other peripheral issuers that may be looking to refinance liquidity borrowed under the long term refinancing operation.

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Electricité de France and Amundi are forming an unusual asset management joint venture, in some ways similar to a private equity firm, to channel investment into low carbon energy.

Swedish Export Credit Corporation could become the next agency to debut in the green bond market, with its underlying documentation nearly in place — but as the issuer is reluctant to raise more debt this year SRI investors might have to wait until 2015 before they can add the name to their portfolios.

Credito Emiliano became the second issuer to take advantage of the European Central Bank’s (ECB) buying programme, launching a covered bond on Thursday. The deal led to a repricing of the issuer's curve in a move that could spur other peripheral names to return to the market.

Nordea Finland has issued the first deal from a eurozone bank that is eligible for the European Central Bank’s covered bond purchase programme. Though it was priced at the tightest ever spread for a 10 year deal for a non-German issuer, investors said it offered good relative value.

The Spanish covered bond law could be set for profound change that will bring it into line with the best in show schemes. Proposals set out on Wednesday by the Spanish treasury tie into capital requirement regulations and will become unstoppable under their own momentum. The major challenge is not that investors will have less collateral protection but rather the transition process itself. Grandfathering existing deals isn’t a viable option, there would need to be a huge debt exchange of all existing bonds for new ones or a fundamental change in terms and conditions.

The Spanish Treasury is proposing to change the country’s covered bond legal framework and on Wednesday asked for feedback from stakeholders by November 24. The move may result in a new regime in which bonds are backed by a tightly defined indexed pool of ring fenced homogenous assets. Though this will result in less collateral, a vast improvement in the quality is likely.

Coventry Building Society returned to the covered bond market for the first time in three years to take advantage of better market conditions than those that prevailed mid-week, and execute a trade before Sunday’s Asset Quality Review and stress test results are out, which could potentially disrupt the broader FIG market. Though there was some sensitivity in the book, the small deal size meant it was able price 2bp inside the tight end of initial guidance, an achievement that would have been unlikely with a €1bn trade.

Of the national central banks which are buying covered bonds as part of the ECB’s covered bond purchase programme, the Bundesbank has been the most active by a large margin, said two covered bond traders. It is said to have accounted for around a quarter of queries in the secondary market from Monday through to 12pm BST on Wednesday.

Nationwide Building Society’s third covered bond of the year had to offer an attractive new issue premium because there was considerable price sensitivity in the book. The deal illustrates that, despite a technical undersupply of covered bonds, there is a greater balance between supply and demand than perceived, especially for bonds ineligible for the European Central Bank’s purchase programme.

The national central banks of France, Portugal and Spain were reported buying covered bonds issued by banks from their own jurisdictions on Monday, said dealers. The amounts were small and the purchases were price sensitive, they added. Offers in Banca Monte Paschi Siena’s covered bonds were unchanged as its shares came under pressure following reports it may need to raise €1.7bn in fresh capital.