Europe

NIBC Bank is planning to launch a second deal off its conditional pass through programme (CPTP) after mandating leads for a roadshow. The issuer’s outstanding deal has performed, but only after a fairly long period of time had elapsed, said bankers.

Moody’s upgrade of Irish covered bonds will expand the universe of demand. The rating action should underpin the Irish ACS market’s recent outperformance, that has been led by the Bank of Ireland’s recent five year. However, despite the real estate market stabilising, two Irish banks were downgraded due to persistent asset quality challenges.

Bank of Ireland returned to the covered bond market on Tuesday to issue its fifth deal since November 2012, when it returned after the Irish sovereign debt crisis. It was well oversubscribed with plenty of orders, but less spectacularly so than on previous issues.

Spain’s CaixaBank took advantage of strong market conditions on Tuesday to issue the country’s second covered bond of the year. The funding took advantage of scarcity at the long end of the Spanish market, and concerns that the other Spanish national champions are more exposed to emerging market risks.

Länsförsäkringar Hypotek (LF Hyp) issued Sweden’s first covered bond deal of the year on Tuesday, having identified solid excess demand in Monday’s deal from Finland’s OP Mortgage Bank. The euro funding was cheaper than what the borrower could have achieved in Swedish kronor.

Finland’s OP Mortgage Bank returned to the covered bond market on Monday to issue a €1bn seven year benchmark. It paid a relatively small new issue premium, reflecting its long scarcity value, the high quality of its deal, and the deal size.

Spanish banks will be able to issue structured covered bonds under planned changes to corporate finance law, Moody’s said on Monday. The law change would enable issuers to structure dual recourse instruments with conditional pass through mechanisms backed by a wide range of assets issued from special funds.

Covered bond investors switched from short into longer dated covered bonds on Monday, secondary market dealers reported, while second tier peripheral bonds continued to attract interest. However, there was better profit taking in multi-Cédulas, which offer a modest spread over government bonds.

The quality of Pfandbriefe is improving, according to Moody’s. Foreign exposure in German public sector Pfandbriefe has decreased by 3.1% over the last five years and foreign exposure in mortgage pools fell 2.4% over the past two years.

Covered bonds are a more important term funding tool than senior unsecured, because of bail-in concerns, Rolf Enderli, head of group treasury at Credit Suisse, told The Cover on Thursday. The issuer may follow Lloyds Bank and bolster subordinate funding by exchanging ECNs with regulatory compliant additional tier one debt, said bankers.

Eika Boligkreditt opened books on Wednesday for a €500m seven year covered bond that offered a spread not seen from Norway since January 2013, and one of the largest pick-ups from a core European issuer this year. But with a new issue premium of just 2bp, the funding was cheap for the borrower.

Credit Suisse enjoyed a stellar response for its second covered bond this year, enabling it to issue €1.75bn, the biggest such deal of 2014. Seemingly generous pricing and the issuer’s strong name spurred demand.