Europe

The three major rating agencies have broadly positive outlooks on the covered bond market next year, but they have underlying concerns about rising unemployment, mortgage payment holidays, sovereign and issuer rating downgrades and Brexit.

Expected euro denominated covered bond supply from the Nordic region looks promising with Norway likely to prove a particularly bright spot. However, more cost-effective domestic funding in the Swedish market is expected to depress euro volumes there.

Germany will remain one of biggest covered bond issuance regions, accounting for up to a fifth of European supply next year. The residential real estate market and economy are expected to remain resilient and, along with robust investor protection built into Pfandbriefe, the market is well buttressed — even when it comes to riskier commercial real estate exposures.

Singapore could prove to be a rich seam of covered bond issuance next year, with bankers suggesting analysts’ expectations are far too pessimistic. Conversely, Australian issuance may prove to be disappointing. Meanwhile, potential new legal developments in Japan and Malaysia will provide a key focus of attention.

Covered bond supply from the Netherlands is expected to lead the Benelux region next year, where a total combined issuance of €9bn is due to surfac,e based on the average of six forecasts.

Covered bond issuance from France is likely to be the highest from any country next year, reflecting the sheer size of the market, high redemptions and banks' propensity to use covered bonds for market funding rather than for repo funding at the central bank.

Investor demand for higher yielding covered bonds from Central and Eastern Europe will likely outpace relatively moderate supply by a considerable amount. And with a wide range of debut issuers in a considerable number of new jurisdictions expected to surface, the outlook is very promising.

Capital markets were breathing a sigh of relief on Christmas Eve after a deal between the UK and EU on their future relationship appeared close, ending fears that the country would crash out of the single market without a trade deal at the end of the year.

Fondo Gomma Plastica, Fopen, Pegaso and Previmoda are looking for a direct lender to manage just under €200m of capital, in a push for higher yielding assets.

The MTN market has had a tough year, as central bank support programmes and rampant public market issuance ate away at the volume done in private markets. Most notable was the 42% decline in bank issuance, which made up the majority of the year’s fall in MTN volume.

The UK Debt Management Office has responded to a letter from the chair of Parliament’s Treasury Select Committee Mel Stride, questioning whether the DMO’s syndications were priced to obtain the best value possible for the taxpayer.

The European Union will introduce a law early next year to oblige member states to report on how they are spending Next Generation EU funds, to support the bloc’s plan to issue green bonds.