Europe

Credit Suisse raised Eu1.25bn on Wednesday through its first benchmark covered bond. An official at the issuer told The Cover that the funding instrument proved its worth by attracting investors new to Credit Suisse and facilitating market access despite challenging conditions.

Credit Suisse is today (Wednesday) making its debut as a standalone covered bond issuer and has attracted strong demand for a Eu1.25bn five year deal despite tight pricing and a challenging market backdrop. Germany’s DVB Bank is in the market with an inaugural ship Pfandbrief.

The covered bond market could still be open for deals from high quality issuers and solid jurisdictions, according to syndicate bankers, despite wider market conditions quickly deteriorating yesterday (Monday) over fears that political turmoil in Ireland could derail implementation of a European Union and International Monetary Fund bailout package.

The pace of benchmark covered bond supply could step up a gear this week, with Credit Suisse eyeing the middle of the week for the launch of its inaugural issue, a Dutch bank said to be close to coming to market and others deciding on next steps after having finished roadshows last week. But another issuer has put primary market plans on hold until next year.

Caja Madrid achieved a 20% hit rate on a Eu16.846bn exchange offer that was closed on Friday, with new three year government guaranteed debt providing for the bulk of a maturity extension that the liability management exercise was targeting. The bank was tackling refinancing challenges that Moody’s today (Monday) said was facing Spanish issuers of mortgage backed covered bonds.

While not immune from nervousness triggered by uncertainty about the prospects and structure of a bailout package for Ireland the covered bond market this week held up relatively well, according to syndicate bankers, who attributed thinner liquidity to the approaching end of the year. A large US dollar private placement yesterday (Thursday) wrapped up sizeable new issuance in covered bonds this week.

Fitch affirmed mortgage backed covered bonds issued by Caixa Económica Montepio Geral at AA yesterday (Thursday) after increasing the programme’s Discontinuity Factor following a review of the legal and regulatory framework for Portuguese covered bonds.

The UK’s Financial Services Authority is delaying phasing in liquidity requirements for larger UK banks pending finalisation of rules being developed by the Basel Committee of Banking Supervisors. The move has been interpreted as a sign that the FSA could broaden the range of assets deemed eligible for liquidity buffers, towards which covered bonds currently do not count.

Moody’s today (Thursday) affirmed mortgage covered bonds issued by Northern Rock Asset Management at Aaa and removed them from review for possible downgrade, where they were placed in 2007.

In brief: Greece’s ATEbank is in the process of establishing a Eu5bn covered bond programme, an official at the bank has confirmed.

Bank of New Zealand International Funding, a subsidiary of National Australia Bank, has met with excess demand for a Eu1bn maximum seven year deal that is the first Australasian covered bond to hit the euro market.

A Eu500m five year Pfandbrief for Austria’s Bank für Arbeit und Wirtschaft (Bawag) was largely unaffected by background uncertainty about the prospects of Ireland signing up for financial assistance, although pricing ambitions were slightly reigned in, according to a syndicate official at one of the leads.