Europe

The Cyprus bailout has sparked a relief rally, with risk assets doing well, but one strategist sees this as an opportunity to sell

Multi-Cédulas came under pressure in the secondary market on Monday after Standard & Poor’s took rating action on 51 classes totalling almost €100bn late last week.

Interest only mortgage loans could destabilise an already stressed Danish housing market, Standard & Poor’s said on Monday.

Kiwibank sold its debut Swiss franc covered bond on Monday morning, drawing healthy demand at a price that tightened slightly from guidance. A lack of competing supply, along with an attractive spread over domestic Pfandbrief issuers, allowed the leads to close books quickly on the oversubscribed trade.

Crédit Agricole Home Loan SFH was the only borrower to visit the euro covered bond market this week. The issuer sold a €250m tap of a 12 year bond, although syndicate bankers disagreed over the premium the increase offered relative to OATs and the original deal.

UBS and Swedbank closed dollar benchmarks this week, pricing their deals well inside where they could have funded in euros. Demand in the dollar market far outstrips supply, and the eager investor base should help draw more borrowers looking to take advantage of the arbitrage.

Greencoat UK Wind, a British closed-ended infrastructure fund with a focus on wind energy, completed a £260m oversubscribed IPO on Friday, seizing on appetite for UK infrastructure funds.

UBS and Swedbank announced dollar benchmarks on Thursday, opting for the safety and favourable cross currency swap available in that market.

Italian covered bond spreads held firm following a round of Fitch downgrades, which came after the rating agency tightened the link between issuer and covered bond ratings in the country.

High redemptions, combined with deleveraging and a drive towards deposit funding has put net first quarter covered bond supply in 2013 on track to hit record lows, said Barclays analysts on Thursday.

Moody’s assigned Kiwibank’s covered bonds a triple-A rating on Wednesday, and bankers expect it to open books on a debut Swiss franc transaction later this week.

Overcollateralisation should not be the main factor when rating agencies assess covered bonds, according to Commerzbank.