Europe

SEB returned to the covered bond market on Monday to issue its second seven year euro benchmark of the year and the second from a Swedish bank in less than a week. Though SEB was unable to match the cheap funding in Stadshypotek’s recent deal, it was placed with more real money investors.

The credit quality of Pfandbriefe is not under threat from the recent rise in German apartment prices, Moody’s said on Monday.

Nordea’s decision to revive traditional callable bonds reduces refinancing risk and strengthens cover pool quality, Moody’s said on Wednesday.

After emerging from blackout on Tuesday, Stadshypotek returned to the covered bond market on Wednesday, mandating joint leads for a euro benchmark. Despite pricing at the tightest seven year Scandinavian deal since 2006, the borrower attracted robust demand, in an exercise that, once again, highlighted just how undersupplied the covered bond market has become.

UniCredit Bank Austria returned to the covered bond market for the second time this year to issue the country’s seventh benchmark in euros. Despite pricing with little to no new issue premium the deal attracted good demand from a wide group of investors.

Covered bond primary activity took off on Thursday after the US government voted to extend the debt ceiling deadline to February 7 next year. As many as four issuers from Italy, Hungary, New Zealand and Canada opened books for new benchmarks. But the star turn was Italy’s Banca Carige which, despite strong headwinds, attracted a resounding endorsement from investors for its first deal since March 2011.

HSBC has returned to the covered bond market for the second time this year with a seven year deal which, like its earlier transaction, was notable for its breadth and depth of demand.

Banco Bilbao Vizcaya Argentaria has begun updating the value of properties backing mortgage loans collateralised in its Cédulas. Though this is likely to lead to a decrease in the overcollaterlisation (OC) ratio, Moody’s applauded the move as it will improve transparency on the credit quality of the cover pool assets.

Banca Carige has mandated leads for a potential euro-denominated covered bond (Obbligazioni Bancarie Garantite) benchmark transaction, which could be launched on Thursday just as the US debt ceiling deadline falls due.

Norway’s banks will not be hit by the finance ministry’s latest changes to balance sheets rules that affect mortgages, as they already operate on a stricter footing, a local banker told The Cover on Tuesday. From next January the loss given default floor for mortgage assets on Norwegian bank balance sheets will double, the finance ministry announced on Sunday.

Despite the close proximity of the US debt deadline on Thursday, the covered bond market was stable and well supported on Tuesday, said bankers, who are waiting for imminent deal mandates from Austria and Italy.

After last week’s flurry of covered bond deals, the primary market kept up its pace on Monday as Norddeutsche Landesbank mandated leads to roadshow a US dollar benchmark, while Aareal Bank priced a small floating rate deal in euros. The secondary market was well supported, but activity was limited by mounting concern that this week’s US debt ceiling deadline may be broken.