Europe

Covered bond issuers decided against bringing benchmark bonds on Friday despite a better backdrop, but there are several potential deals in the pipeline and stronger sentiment should encourage issuers looking to come next week, said bankers.

After Moody’s downgraded French mortgage guarantor Crédit Logement from Aa2 to Aa3 this week, SG said on Wednesday that a downgrade below single-A would result in a 20% haircut to the value of the mortgage loan collateral it guarantees.

Fund managers pared back their exposure to emerging market equities this month, with appetite for risk declining, a survey of fund managers shows

Münchener Hypothekenbank opened books on a £200m three year floating rate deal on Wednesday morning, becoming the latest borrower to take advantage of a starved sterling investor base.

Nykredit announced a benchmark junior covered bond mandate on Wednesday, just a day after Standard & Poor’s warned that Danish covered bond ratings could become increasingly reliant on the junior asset class.

The IMF's World Economic Outlook cut global growth projections slightly, but said the manufacturing and trade cycle has begun to reaccelerate

Crédit Mutuel CIC became the first French issuer to tap the sterling market for more than five years on Monday. It joined the growing list of foreign banks that have tapped the blossoming sterling covered bond market, in the absence of any UK bank deals for almost a year. In so doing, it raised funds at much cheaper levels than it could have done in euros.

Austria’s Vorarlberger Landes-und Hypothekenbank (Vorarlberger Hypo) made its mortgage Pfandbrief debut on Tuesday, selling a tightly priced seven year bond and taking supply in that maturity to over €4bn in only a week.

The environment for equities in emerging markets is becoming more difficult but the developing world consumer remains a bright spot

HypoVereinsbank (HVB) closed a €500m seven year mortgage Pfandbrief on Monday after opting for a more generous starting point than those on recent German deals. It was rewarded with a far larger orderbook, which allowed it to price the bond well inside initial price thoughts.

Crédit Mutuel CIC sold its first covered bond of 2013 and its first euro benchmark in over a year on Monday, launching a €1.25bn seven year transaction flat to its own curve.

Covered bond syndicate officials are predicting as many as five deals will be launched next week following a wave of successful core transactions.