Europe

Three European borrowers mandated covered bond deals on Monday, taking advantage of what could end up being only a brief funding window in the wake of the European Central Bank’s announcement last week that it would support peripheral sovereign debt markets.

Moody’s cut Santander Totta’s covered bonds in line with the Portuguese sovereign’s new rating ceiling, which caps all the country’s covered bonds one notch above junk.

Covered bond issuance is on hold while the European Central Bank’s meeting in Frankfurt commands all attention. ECB president Mario Draghi is expected to provide details of a sovereign bond purchase programme and peripheral sovereign spreads have already tightened in expectation. But analysts said investors fearing a disappointing programme could switch to into covered bonds — with Cédulas the most likely to benefit from such a shift.

Crédit Agricole gave an investor presentation for its new Obligations Foncières (OF) programme in Paris on Wednesday, ahead of what could be the first covered bond from a French issuer since late March. French spreads have stopped grinding tighter in the secondary market, but some names still trade flat or even through OATs.

German Pfandbrief issuers have pushed primary spreads to record lows, but with minimal hope for secondary performance at such tight levels investors could start to push back on pricing.

Münchener Hypothekenbank made history this week, pricing the tightest ever euro benchmark covered bond. Despite the sub-Euribor level the public sector backed deal drew broad European demand that surprised even the issuer, a spokesman for which told The Cover it intends to return with another benchmark deal later in the year.

Austria’s Raiffeisenlandesbank Niederoesterreich-Wien (RLB NW) sold its inaugural benchmark covered bond on Tuesday, building a four times oversubscribed book for a 10 year mortgage backed trade.

Münchener Hypothekenbank on Monday launched one of the tightest euro benchmarks ever sold and took covered bonds into sub-Euribor territory for the first time in over four years.

The French Ministry of Economy and Finance released a press release on Saturday evening saying that it would guarantee the debt of Caisse Centrale du Credit Immobilier de France (3CIF) and its subsidiary CIF Euromortgage, subject to approval from the European Union and the French Parliament.

UniCredit’s German arm HypoVereinsbank (HVB) returned to the covered bond market for the first time in almost a year on Monday. HVB extended its curve by seven years with a 10 year mortgage Pfandbrief, and divided syndicate bankers with its pricing.

The French government has been forced to guarantee the debt of Credit Immobilier de France after it failed to find a buyer for the mortgage provider.

Deutsche Bank brought the covered bond market to the brink of sub-Euribor pricing on Friday, issuing a €750m eight year mortgage Pfandbrief just a single basis point above mid-swaps. With the secondary squeeze grinding onwards syndicate bankers said it was only a matter of time until the Euribor barrier was broken.