Europe

When National Bank of Greece announced a buyback last month, many market participants felt it would be a one off. But soon after Portugal’s BPI launched its own tender and because that market is slightly bigger, bankers said a handful of issuers might well consider a similar exercise. Now Spain’s Caixabank has followed suit by announcing a tender. Given the large €360bn size of the Cédulas market, it’s fair to assume that the potential for ALM exercises is much greater than had previously been assumed.

Erste Group Bank comfortably printed €1bn off the back of the largest ever book for an Austrian covered bond on Wednesday. The successful 10 year offering has opened the door for other Austrian names and put to bed negative headlines following the sovereign’s recent downgrade.

Santander built potentially the largest ever order book for a covered bond on Wednesday, restarting Spanish supply with a stellar €2bn benchmark. The trade answered an investor base baying for three year paper after an LTRO induced drought, and a variety of issuers from in and outside the Eurozone could follow in its wake.

Erste Bank launched the first Austrian benchmark of 2012 on Wednesday. It was also the first Jumbo trade from the region since last May.

A day after Santander said it would not need to access wholesale markets this year, the bank surprised the market and broke the seven month cédulas drought with a blow-out €2bn three year.

Sparebanken Vest Boligkreditt (SVB) uncovered €1.6bn of demand in one hour and priced the tightest Norwegian deal this year on Tuesday. Meanwhile, Erste Bank is looking to issue a new 10-year.

Weaker Brent crude prices - especially in local currency terms - are likely to buoy Asia markets, and boost monetary easing. But it's a different story for EEMEA, according to a Bank of America report

The ECB's Long Term Refinancing Operation could increase the bid for covered bonds through its restorative effect on the senior unsecured market.

Rabobank's Obvion managed to almost double the size of its Storm 2012-1 RMBS, while tightening pricing on the short tranche by 10bp. The success of the trade surpassed expectations of market participants. Though covered bonds would be cheaper, the RMBS financing is isolated enough to protect the bank's top senior rating.

Bank of New Zealand returned to the market on Monday with a long three year benchmark, after postponing a five year trade earlier this month. The change of maturity and capped deal size yielded a far more positive result, with over 100 accounts contributing to the most oversubscribed order book of the year.

Barclays Capital’s new fiscal strength covered bond indices, which adjust the market value weighted exposure of country risk based on fiscal strength, have won the support of investors polled by The Cover.

The secondary market in covered bonds is in danger of breaking, and though it is not there yet, there are concerns over ‘forced delivery squeezes’ in the repo market which may lead to failed trades. Though it has always been the intention of the European Central Bank to improve liquidity, there are some who now say that it is not doing enough. Covered bonds could risk becoming almost like a private placement market if the current situation persists.