Europe

Secondary trading has picked up pace in light of limited primary issuance. An attractive rates environment has ensured continued demand for long dated French paper, while selling has increased in peripheral covered bonds now flat to the government curve.

Distressed Portuguese and Irish issuers could have the option to postpone the repayment of maturing covered bonds, according to UniCredit analysis, due to ambiguous wording about failure to pay the final redemption amount.

Moody’s fifth covered bond monitoring overview suggests that Norwegian covered bonds have the highest collateral quality, according to Bernd Volk, head of European agency and covered bond research at Deutsche Bank. The report also indicates the collateral risk of Portuguese and Irish bonds, has deteriorated, while the cover pools of Spanish and Greek issuers have the highest loss expectancy, said Volk.

After the pricing of Helaba’s Eu1bn 5 year no grow and Crédit Agricole’s $1.5bn 3.25 year, SBAB’s Swedish Covered Bond Corp is in the market on Thursday with a Eu1bn no grow five year. From here on issuance could start to fall — as a number of factors conspire.

After failing to get a six-year cédulas away earlier this the week, La Caixa successfully priced a five year deal on Tuesday. The eventual transaction, which saw two leads replaced, illustrates that, despite an improvement in fortunes for Spain generally, investor demand is clearly focused on the short to medium part of the curve for peripheral names; anything longer becomes much more price sensitive.

Coventry Building Society has successfully priced its inaugural covered bond eight basis points inside where Yorkshire Building Society was able to issue only a few days earlier.

La Caixa returned to market on Tuesday, after postponing a six year cédulas trade on April 5, amid claims the deal struggled to gain traction on the basis of an over-ambitious spread whisper.

On the back of conducive bank finance regulation, covered bond issuance is soaring, writes Bill Thornhill. Meanwhile several countries, most notably the US, are moving towards establishing fresh covered bond markets

During the crisis, the Nordic covered bond market firmly established its credentials as an anchor of stability, with spreads holding firm and borrowers maintaining their access to the market. Since then, continued strong demand for exposure to the region has supported a further narrowing of spreads relative to other core European covered bonds. In the EuroWeek/Natixis Nordic covered bond roundtable, a number of leading issuers from the region discussed the underlying reasons for this strength, and the outlook for the market.

While Coventry Building Society is expected to bring an inaugural sterling deal this week, via leads BNP Paribas and Barclays Capital, the majority of regular issuers may decide to wait until after Easter.

Moody’s cut the covered bond ratings of seven Portuguese banks on Friday following downgrades of the issuers’ senior unsecured ratings on April 6, which followed a downgrade of Portugal’s sovereign debt rating the day before.