Europe

UniCredit Bank Austria will look to bring its third benchmark covered bond of the year in the next few days, market conditions permitting. The issuer can expect strong participation from Austrian and German investors, but it is also visiting investors in Helsinki and Copenhagen on Tuesday in a bid for more Nordic interest.

Austria’s Hypo Noe Gruppe Bank negotiated worsening market conditions on Thursday afternoon to price a no-grow €500m three year Pfandbrief, the second public sector deal in that tenor out of the jurisdiction in two weeks.

The Italian Department of Treasury is considering introducing a new instrument, separate from OBGs and securitisation, that would allow banks to use a wider range of assets for funding. Though only in a discussion phase, the move may see Italian issuers join their French and German counterparts in using structured covered bonds to alleviate funding pressure.

Hypo Noe unexpectedly announced a three year transaction, having decided to hold off earlier in the month due to price sensitivity. Meanwhile ANZ New Zealand brought its long awaited covered bond debut, a five year euro deal, having postponed it in early June.

A stronger than normal bid from Nordic investors helped Finland’s Sampo Housing Loan Bank to sell a no grow €1bn five year covered bond, its second benchmark this year, on Wednesday.

Moody’s has downgraded the mortgage backed covered bonds of two of BRFkredit capital centres, after downgrading the issuer from Baa1 to Baa3 in early July.

Convincing 136 accounts from 19 countries to participate in a €2bn benchmark, DnB Nor brought the transaction many syndicate officials had been waiting for.

Italy should amend its Obbligazioni Bancarie Garantite law to reduce refinancing risk in the event of an issuer default and give investors a better chance of a full recovery, a conference in Milan heard this week.

Finland’s Sampo Housing Loan Bank launched a five year deal on Wednesday, three weeks after it finished a European roadshow. The deal attracted a wide range of accounts and looks assured of success, boding well for other smaller bank issuance.

Secondary activity in the covered bond market is picking up, with a slew of deals and merger activity spiking interest. DexMA is performing but Dexia Kommunalbank is rudderless. Banco Pastor has tightened and Caixa Catalunya has seen some interest. Tier one French names are also enjoying better selling. More generally, stronger ECB rate cut expectations mean the short end is well supported.

Moody’s has placed Banco Popular’s ratings on review for downgrade following an exchange offer from the bank for 100% of Banco Pastor’s shares and mandatory convertibles.

DnB Nor proved jumbo transactions with minimal premia were possible on Tuesday, launching a well received five year trade expected to be €2bn in size. Credit Suisse meanwhile paid up handsomely for a seven year transaction not helped by the difficult tenor.