Europe

Caja Rural de Navarra has picked joint leads for a roadshow and possible deal. Its announcement late on Wednesday came after Moody’s said that the prospective A3 rated €500m Cédulas was overcollateralised by 623% which will allay negative equity concerns.

Miguel Angel Gadea, head of funding at Cajas Rurales Unidas (Cajamar), spoke to The Cover on Wednesday, following its debut deal as a merged entity. Cajamar, which plans to be a regular issuer, has grown deposits, expects to raise its core capital ratio this year and aims to stabilise its ratio of non-performing loans with a proactive approach to servicing.

Norway’s central bank plans to continue excluding covered bond mortgage subsidiaries from using its lending facility and says the level of asset encumbrance should be linked to the cost of deposit insurance. Analysts said that the news was disappointing for the covered bond market.

The provision for loan-to-value disclosure in proposed changes to the German Pfandbrief Act are credit positive, said Fitch on Wednesday. But the provision of whole loan LTV disclosure would be better as it would give investors a clearer picture of default risk.

Cajas Rurales Unidas (CRU) accessed capital markets for the first time on Tuesday, bringing a €500m three year covered bond. Price discovery was tricky, given the absence of liquid comparable deals.

Japanese money is going into developed markets rather than emerging ones for now, the Bank of Japan Governor says in an interview

Despite a UK holiday syndicate bankers are not ruling out deals on Monday, and there are still borrowers eager to execute bonds in run up to summer, they said.

Bankinter’s latest €500m tap this week came with a tighter spread and drew more international accounts than the borrower has managed with any benchmark deal in recent years. As its issuance costs drop its loan portfolio is becoming profitable, and though it remains barred from the senior unsecured market, comfortable covered bond funding costs and foreign demand are steps in the right direction, a funding official told The Cover.

Länsförsäkringar Hypotek (LF Hyp) plans to issue smaller, but more, regular covered bond deals. Speaking to The Cover on Tuesday, vice executive president and head of treasury, Martin Rydin, said that due to growth in deposits and senior unsecured funding, covered bond funding will account for a smaller proportion of the bank’s overall need.

Münchener Hypothekenbank tapped its recent three year sterling floater for another £100m on Tuesday, taking advantage of a market window before holidays and programme updates prevent issuance.

Moody’s has downgraded Italy’s Banca Carige and will turn its attention to the issuer’s covered bonds, which traders expect to come under selling pressure in the secondary market.

Sweden’s Länsförsäkringar Hypotek returned to covered bonds on Monday, after almost two years away from the market. Its rarity and top quality collateral ensured conclusive investor endorsement, despite competing Spanish supply.