Europe

No country is immune from adverse spillovers from crises originating elsewhere, writes Dr. Prasarn Trairatvorakul, Bank of Thailand governor

The increase in retained issuance will have a lasting impact on the primary covered bond market and could reduce benchmark supply to ‘showcase transactions’, Barclays analysts warn.

Standard & Poor’s cut its rating on another pair of Cédulas programmes this week, but the stellar result for Bankinter and UniCredit showed single-A rated trades can still find a stampeding demand. UK buyers bought more than expected in both deals, as syndicate leads pointed to a new class of accounts that could support peripheral transactions.

Emerging markets are going through a liquidity rally, boosted by money-printing by the Fed and the ECB. But it may turn into a growth rally

Irish Finance Minister Michael Noonan has rejected a private members’ bill to adopt the Danish balance principle for covered bonds but he will investigate whether some elements of the bill could be rolled out.

Bankinter on Thursday swiftly followed peripheral peer UniCredit’s success from the day before. The Spanish borrower launched a blow-out three year benchmark trade 20bp inside initial price thoughts, as traders struggled to keep up with a big spread rally in peripheral paper.

As part of a long term shift in its funding strategy, France’s Crédit Foncier is to start issuing RMBS alongside covered bonds. It is set to begin with a private placement in the coming weeks.

Covered bonds may have caused a growth in mortgage lending and an increase in house prices that now pose a threat to the stability of the Norwegian financial sector, the country’s financial regulator said on Tuesday. To address the risk from the rise of secured funding, Norway’s Financial Supervisory Authority is debating whether to follow other jurisdictions and impose limits on covered bond issuance.

Investor sentiment towards Spain and Italy has improved since August, according to a Crédit Agricole survey. However, most buyers’ credit lines are unchanged, which means many still cannot take advantage of remarkable relative value.

Bayerische Landesbank sold its second ever dollar covered bond benchmark on Tuesday, pricing a $500m two year trade that carried one of the lowest ever coupons in the dollar covered bond market.

SNS Bank’s covered bonds have been downgraded, but remain firmly above the increasingly populated and more relevant double-A minus rating threshold. Moreover, with a collateral score that beats many top German and Norwegian issuers, alongside a recently enhanced programme that has Rabobank as the swap provider — its bonds offer tremendous relative value.

Bayerische Landesbank opened books on its first benchmark dollar covered bond since 2005 on Monday. It could price the $500m two year trade later on Monday but may leave books open overnight to attract Asian accounts.