Covered Bonds - All Articles

  • WL Bank wins over central banks with three year

    WL Bank priced the shortest fixed rate euro denominated covered bond of the year on Tuesday, at the tightest spread of any transaction since November 2012. Bankers off the deal questioned why any investor would pay such a tight price, while those on the deal said the cheap funding reflected the issuer’s high quality appeal.

    • 31 Jan 2014
  • Italian borrowers snub EM volatility to issue longest covered bonds

    The covered bond market showed its mettle this week as two peripheral issuers spurned emerging market volatility to price large, long dated benchmarks which drew exceptional demand.

    • 31 Jan 2014
  • CM-CIC absorbs €1.5bn but manages to perform

    Core covered bond deals sized at €1.5bn have had mixed success so far this year. Tuesday’s five year from Crédit Mutuel CIC SFH was only moderately oversubscribed but was well placed, trading stably at end of the week.

    • 31 Jan 2014
  • Italian borrowers snub EM volatility to issue longest covered bonds

    The covered bond market showed its mettle this week as two peripheral issuers spurned emerging market volatility to price large, long dated benchmarks which drew exceptional demand.

    • 31 Jan 2014
  • CM-CIC absorbs €1.5bn but manages to perform

    Core covered bond deals sized at €1.5bn have had mixed success so far this year. Tuesday’s five year from Crédit Mutuel CIC SFH was only moderately oversubscribed but was well placed, trading stably at end of the week.

    • 31 Jan 2014
  • Waiting for Spain

    January 2014 has had is similar amount of covered bond supply as this time last year, but redemptions and coupon payments have almost halved compared with 2013. The most deals have come from France and Italy, both up sharply from last year, while the largest decline in issuance has been in Spain, and to a lesser extent Germany and Norway.

    • 31 Jan 2014
  • Covered bond core sellers buy periphery, even as BTPs widen

    There was strong secondary market interest in the long end of the peripheral market, and especially Italian bonds, on Thursday. In contrast, core covered bonds came under greater selling pressure, partly due to switching interest from Wednesday’s deals. The flows were counter-intuitive to the wider macro backdrop, where the flight to safety bid has resumed.

    • 30 Jan 2014
  • DZ finds French trading anomaly

    The covered bonds of French issuers that are backed by relatively weaker collateral are trading at the tightest spreads, while French deals backed by higher quality collateral are trading at wider spreads, according to DZ Bank covered bond research.

    • 30 Jan 2014
  • Covered bonds dominate as FIG recovers from slump

    The covered bond market is taking the limelight this week, with five borrowers from Germany, France and Italy issuing deals at vastly different funding levels, and with very different outcomes. Senior was slower to start, after last week’s sell-off, and while capital deals are promised, they have yet to materialise.

    • 29 Jan 2014
  • Intesa Sanpaolo mops up UBI’s leftover demand

    Intesa Sanpaolo brought forward a 12 year deal on Wednesday, after witnessing the extraordinary demand for UBI Banca’s 10 year. Intesa’s book was less spectacularly oversubscribed, but its long tenor should ensure a high proportion of quality interest, boding well for its performance.

    • 29 Jan 2014
  • UBI shows insatiable demand for Italian covered bonds

    The primary covered bond market sprang into life on Wednesday with four deals from Germany, France and Italy. Pride of place went to Unione di Banche Italiane, the only one to have publicly mandated a deal the previous day. It was oversubscribed about five times based on the unreconciled book and may have pushed Intesa Sanpaolo into bringing forward its own issuance plans (see other story).

    • 29 Jan 2014
  • WL Bank goes short and tight

    WL Bank was set to price the shortest fixed rate euro denominated covered bond of the year on Tuesday, at the tightest spread of any transaction since November 2012. Bankers off the deal were surprised that any investor would pay such a tight price, while those on the deal said the cheap funding was a reflection of the issuer’s high quality.

    • 28 Jan 2014
  • Portuguese pass-through covered bond

    Moody’s and DBRS have upgraded the Series 1 covered bonds of Portugal’s Banco de Investimento Imobiliario (BII) after they were restructured using a pass through mechanism. The notes will be retained and are designated purely for central bank funding. Parent bank, Banco Comercial Português (BCP), is monitoring the market and, if it were to issue a publicly syndicated deal, it would use its existing programme structured with a soft bullet maturity, said bankers.

    • 28 Jan 2014
  • Second Flugzeug Pfandbrief on runway

    Norddeutsche Landesbank Girozentrale has mandated joint leads to organise a roadshow for its second aircraft Pfandbrief and said a new deal is expected to follow.

    • 28 Jan 2014
  • Spreads steady as issuers hold fire

    Despite renewed emerging market volatility and, to a lesser extent, European peripheral sovereign weakness, the covered bond market was steady on Monday. Secondary market volumes have collapsed, but bankers were encouraged by the market’s stoic response to wider credit woes.

    • 27 Jan 2014
  • Crédit Agricole adds to covered research team

    Stephan Dorner is joining the credit research team at Crédit Agricole CIB in London as a covered bond analyst.

    • 27 Jan 2014
  • Turkey takes a step forward, and another back

    Turkey’s updated covered bond law is credit positive, Moody’s said on Monday, after the country’s Capital Market Board announced the changes last week. However, the timetable for the first Turkish euro denominated mortgage backed benchmark has been pushed back after the lira hit new lows.

    • 27 Jan 2014
  • Belfius pays small NIP; Commerzbank and Kommunalkredit hit the road

    Belfius Bank on Tuesday launched a tightly priced five year covered bond that was easily digested, thanks to its relatively small size. Meanwhile, Kommunalkredit Austria and Commerzbank named leads for deals to be launched following respective roadshows.

    • 24 Jan 2014
  • Pimco’s Mierau sets covered bond ETF stall

    Pacific Investment Management Co and Source UK Services, an exchange-traded products provider, have put their expertise together to offer the first active exchange traded fund that invests purely in covered bonds.

    • 24 Jan 2014
  • Bund rally still weighs on covered sentiment

    The rally in Bunds and swaps caused covered bond bankers further concern on Friday. Profit taking still dominates secondary flows, and with already heavy dealer inventories building further, the environment will not rekindle primary flow. Yet, covered bonds regularly face such corrections and in the long run yields will move higher, buyers will return and the covered market’s constructive technical backdrop will come back into play.

    • 24 Jan 2014
  • Pimco’s Mierau sets covered bond ETF stall

    Pacific Investment Management Co and Source UK Services, an exchange-traded products provider, have put their expertise together to offer the first active exchange traded fund that invests purely in covered bonds.

    • 24 Jan 2014
  • BPCE shows price leadership with generous covered bond

    BPCE won plaudits from investors and bankers for the pricing on its €1.5bn six year covered bond which offered an unusually attractive new issue premium. In contrast to all other French issuance this year, it has performed well since becoming free to trade.

    • 24 Jan 2014
  • Covered bond ratings safe from Fitch sovereign risk proposals

    Fitch has set out how its ratings of covered bonds will be constrained by the credit quality of sovereign risk. Its criteria exposure draft gives specifics on how the agency embeds sovereign default risk in its ratings stresses.

    • 23 Jan 2014
  • Commerzbank spells out SME changes

    Commerzbank hit the road this week to update investors about changes to its SME covered bond programme. However, a second SME deal off the programme will have to wait until it emerges from blackout, lead banks said.

    • 23 Jan 2014
  • Carige’s covereds collapse

    Banca Carige’s covered bonds widened sharply in the secondary market on Thursday amid continued weakness among recent issues, and some selling of second tier peripheral credits.

    • 23 Jan 2014
  • BPCE shows covered bond pricing leadership

    BPCE won widespread praise for pricing its €1.5bn six year covered bond on Wednesday with an usually attractive new issue premium. Bankers on and off the deal applauded the move, as did investors, who have been sorely disappointed by this year’s poorly performing transactions.

    • 22 Jan 2014
  • Secondary stabilises, but flows ebb

    Depfa was little changed in the secondary market on Tuesday, despite having delayed its sale, while dealers reported that the general market had stabilised after earlier weakness.

    • 21 Jan 2014
  • Kommunalkredit mandates

    Kommunalkredit Austria appointed joint leads on Tuesday for a public sector backed deal likely to be launched after a roadshow.

    • 21 Jan 2014
  • Belfius pays small premium for five year

    The covered bond primary market sprang back to life on Tuesday as Belfius Bank launched a €500m five year, while Kommunalkredit Austria named leads for a deal to be launched following a roadshow (see other story).

    • 21 Jan 2014
  • Ireland outperforms and investors perk up

    Belfius Bank has mandated joint leads for a deal to be launched on Tuesday. Meanwhile, secondary market spreads have stabilised, and Irish bonds have outperformed following the country’s rating upgrade. Despite a mixed secondary market tone, investors are bullish on core prospects at the long end due to the curve’s steepness and impact of roll down.

    • 20 Jan 2014
  • Covered still key to bank funding, says S&P

    Covered bond ratings stabilised over the final quarter of 2013, according to Standard & Poor’s. Country risk will continue to influence ratings this year, it predicts, while covered bonds will still play a big part in bank funding, as credit conditions remain negative.

    • 20 Jan 2014
  • Italy draws closer to SME covered bonds

    The Italian government is poised to amend the country’s covered bond law to allow issuers to use SME collateral for a new type of dual recourse bank bond, or Obbligazioni Bancarie Collateralizzate, writes Bill Thornhill.

    • 17 Jan 2014
  • SSA, periphery supply sets off core covered bond alarm

    Core covered bond issuers risk triggering a sell-off in the product by attempting to lure deserting investors back with fatter premiums, bankers warned this week as German new issues mostly struggled, writes Bill Thornhill.

    • 17 Jan 2014
  • Abbey follows Lloyds as FLS change spurs supply

    UK’s Abbey returned to the sterling covered bond market for the first time since February 2012 with a three year floating rate deal. The transaction benefitted from unfulfilled demand from Lloyds Bank's earlier deal, and both were driven by changes to the UK's Funding for Lending Scheme (FLS).

    • 17 Jan 2014
  • Aareal and Bank Austria bid as spreads go wider

    Aareal Bank and Bank Austria on Monday each raised €500m in covered bond funding at competitive levels, attracting oversubscribed order books, even as spreads widened in the secondary market.

    • 17 Jan 2014
  • SSA, periphery supply sets off core covered bond alarm

    Core covered bond issuers risk triggering a sell-off in the product by attempting to lure deserting investors back with fatter premiums, bankers warned this week as some new issues struggled.

    • 17 Jan 2014
  • Initial price thoughts may not be needed for liquid markets

    Initial price thoughts are a useful price discovery tool in illiquid markets. But in core markets where liquidity is high, they can obfuscate how successful a deal has been. It is time to consider doing away with them where possible.

    • 17 Jan 2014
  • Old market shows talent for the new

    The conditional pass-through mechanism and SME structured covered bonds were the market’s big innovations last year and more issuers in more regions should adopt these pioneering developments in 2014, while Spanish banks are considering a brand new covered bond structure.

    • 17 Jan 2014
  • Primary hopes pinned on Bund sell-off

    The outlook for covered bond supply remains quite good but issuance could start to taper off next week. The 20bp rally in Bunds this year has hit demand and has caused some issuers to wait. They hope for a weaker Bund and higher yield which is expected to revitalise demand and issuance, bankers told The Cover on Friday.

    • 17 Jan 2014
  • UniCredit three year covered FRN could prove pioneering deal

    UniCredit’s decision to issue a three year floating rate covered bond in benchmark size alongside a 10 year fixed rate deal was a response to the new regulatory environment and could pave the way for a new market sector. The new format may help improve funding opportunities for other issuers, particularly in Europe’s periphery.

    • 17 Jan 2014
  • CBA extends sterling FRNs to four years

    Commonwealth Bank of Australia added to the trend for sterling floating rate covered bonds on Friday, issuing a £350m four year deal. It followed the recent three year sterling deals from Lloyds Bank and Abbey. Given, CBA’s lack of repo eligibility with the Bank of England, a smaller issue was expected. Meanwhile, Deutsche Hypothekenbank also issued a floater, bringing a €250m two year Pfandbrief.

    • 17 Jan 2014
  • ABN revitalises core covered bond supply prospects

    ABN Amro returned to the covered bond market on Thursday, issuing a €1.5bn 10 year deal with an attractive new issue premium. The deal showed that, for the right name and spread, the market is still receptive to core issuers. However, with the long end now saturated, questions are growing over the market’s outlook.

    • 17 Jan 2014
  • UniCredit opens way for three year floaters

    UniCredit’s decision to issue a three year floating rate tranche in benchmark size was a response to the new regulatory environment and could pave the way for a new market sector, Waleed El Amir the bank’s head of long term funding, told The Cover on Thursday. The new format may help improve funding opportunities for other issuers, particularly in Europe’s periphery.

    • 16 Jan 2014
  • ABN’s raises €1.5bn, but questions remain

    ABN Amro returned to the covered bond market on Thursday, issuing a €1.5bn 10 year deal with an attractive new issue premium. However, with the long end now saturated with supply and the secondary market still looking soft, questions continue to linger.

    • 16 Jan 2014
  • Sekerbank plots debut Eurobond, covered bond and loan increase

    Turkey's Sekerbank is considering issuing its debut Eurobond this year, covered bonds and it is increasing the size of a rolled over syndicated loan. The funding is being done to support the 15%-20% growth of the bank it expects this year.

    • 16 Jan 2014
  • FIG bankers eye quick recovery after blip

    A phenomenal amount of new supply since the start of 2014 meant the FIG market was bound to suffer some indigestion eventually. It did so on Tuesday, after Intesa Sanpaolo struggled to find traction with an eight year senior trade on Monday. Bonds widened on Tuesday and the market took a breather, but things seemed to be back on track on Wednesday.

    • 15 Jan 2014
  • Turkish banks line up for 2014 covered bond dash

    The Turkish covered bond law will be updated any moment now, paving the way for the first publicly syndicated euro denominated, mortgage backed covered bond. VakıfBank, Işbank, Ziraat Bank, and Akbank are in the frame, but the odds-on favourite to bring the first benchmark sized deal is Garanti Bank, which may surface in the first quarter.

    • 15 Jan 2014
  • Covered falls behind senior but its potential is still good

    Good news has been hard to come by in the covered bond market of late. Three years of declining volumes has left the market a shadow of its former self. But with €444bn of supply posted with the ECB, there is tremendous potential for substantial growth, especially since the senior unsecured funding is likely to become more expensive. But issuers will need to pay careful attention to encumbrance as regulatory scrutiny will only increase.

    • 15 Jan 2014
  • Italy draws closer to SME covered bonds

    The Italian government is poised to amend the country’s covered bond law to allow issuers to use SME collateral for a new type of dual recourse bank bond or Obbligazioni Bancarie Collateralizzate. If structured with a soft bullet, the uplift above the issuer’s rating would be limited, Fitch said on Tuesday. However, bankers said the prospective bonds would be more likely to use a pass through structure.

    • 15 Jan 2014
  • UniCredit reveals extent of peripheral bid

    Italy’s UniCredit showed that the covered bond market is wide open for the right name and spread with a strong reception for its dual tranche fixed and floating rate covered bond on Wednesday. The deal will shore up sentiment for peripheral markets, but means little for core issuers whose bonds have recently softened, said bankers.

    • 15 Jan 2014
  • NAB aims for Swiss covered debut

    National Australia Bank is expected to sell the first international covered bond in the Swiss franc market on Monday afternoon, its debut in the currency. While Australian issuers are generally popular with Swiss investors, bankers away from the deal have speculated that an unsecured bond may have been a wiser choice for the issuer.

    • 14 Jan 2014
  • Odd eight year puts punters off Pbb

    Deutsche Pfandbriefbank (Pbb) issued 2014’s second Pfandbrief deal on Tuesday but despite a highly supportive technical backdrop, a generous new issue premium and small deal size, it was unable to muster a convincing level of demand. The anaemic reception was due to the odd choice of an eight year tenor, said bankers, but it also raised concerns over supply indigestion.

    • 14 Jan 2014
  • Softer secondary hints at higher spreads to come

    Aareal Bank and UniCredit Bank Austria priced successful euro deals in five and 10 year maturities on Monday, while Abbey issued a three year in sterling. All three priced at the tighter end of initial thoughts. However, prospective core borrowers with larger funding needs may need to offer more tempting spreads as the market softened on Monday.

    • 13 Jan 2014
  • Moody’s backs covered moves in Korea and Singapore

    Kookmin, Woori and Shinhan have large mortgage market shares according to Moody’s which gave a positive assessment of the country's new covered bond regulation. The rating agency also said Singaporean regulation was a positive despite shortfalls.

    • 13 Jan 2014
  • DBS touted for Singapore’s first covered bond after Fitch backing

    DBS Bank is touted to bring Singapore’s first covered bond, possibly in the first quarter, bankers told The Cover on Wednesday, with Barclays and Deutsche Bank rumoured to be the lead managers. The Monetary Authority of Singapore cleared the way for banks to structure covered bond deals, when it updated its issuance rules on December 31.

    • 13 Jan 2014
  • French covered bond issuers sate demand at the long end

    The public sector-owned French covered bond issuers, Caffil and La Banque Postale, returned to the covered bond market to issue two of the three 10 year deals seen this week. The deals were comfortably oversubscribed and provided exceptionally cheap funding for both issuers.

    • 10 Jan 2014
  • Nordics lead pack for core covered bond issuance

    Nordea Finland and Sparebanken Vest Boligkreditt achieved the best results among the slate of deals that were issued by core covered bond issuers this week. Both transactions attracted among the highest level of over subscription, despite pricing at the tightest spreads.

    • 10 Jan 2014
  • The Cover view: Are IPTs really necessary for core issuers?

    Initial price thoughts are a useful price discovery tool in illiquid markets. But in core markets where liquidity is high, they can obfuscate how successful a deal has been. It is time to consider doing away with them where possible.

    • 10 Jan 2014
  • Aareal mandates as other core names line up

    Aareal Bank has mandated joint leads for a benchmark covered bond likely to be launched early next week. A number of other mainly core issuers are also eyeing next week’s market. But, with senior spreads still trading tight, most borrowers will probably defer covered bond deals until later in the year, said bankers.

    • 10 Jan 2014
  • French covered bonds sate long end demand

    The public sector-owned French covered bond issuers, Caffil and La Banque Postale, returned to the covered bond market to issue two of the three 10 year deals seen this week. The deals were comfortably oversubscribed and provided exceptionally cheap funding for both issuers.

    • 10 Jan 2014
  • Korea finally approves bank covered bonds

    Korea has passed its Covered Bonds Act, a year after it was first expected, becoming the first Asian country to have legislation for covered debt.

    • 10 Jan 2014
  • Slow bookbuilds for core covered issuers

    Thursday’s suite of covered bond issues from Australia and Switzerland underscored a growing impression among bankers that pricing core transactions is taking more forethought and effort. Whereas deals were invariably easy to price last year, demand seems to have become more finite. Books are taking longer to build as investors need more cajoling to meet issuers’ funding targets, in stark contrast to peripheral credits.

    • 10 Jan 2014
  • Peripheral covered bond issuers take limelight in busy first week

    Nine euro issuers took advantage of strong market conditions to raise €8bn in covered bond funding during the first week of the year. The issuers collectively attracted €17bn of demand spread over more than 900 orders, but the pick of the bunch were two borrowers from Spain and Portugal who attracted by far the highest levels of over-subscription over the broadest range of investors.

    • 10 Jan 2014
  • Lloyds scores triumphant sterling return

    Lloyds Bank issued the first sterling covered deal from a UK issuer in the home currency since May 2012 on Tuesday. Despite pricing at a fraction of the 170bp spread that Clydesdale Bank paid for the last UK sterling floating rate deal, Lloyds managed to achieve the highest level of demand for this format in local currency.

    • 10 Jan 2014
  • Nordics lead pack for core covered bond issuance

    Nordea Finland and Sparebanken Vest Boligkreditt achieved the best results among the slate of deals that were issued by core covered bond issuers this week. Both transactions attracted among the highest level of over subscription, despite pricing at the tightest spreads.

    • 10 Jan 2014
  • Peripheral covered bond issuers take limelight in busy first week

    Nine euro issuers took advantage of strong market conditions to raise €8bn in covered bond funding during the first week of the year. The issuers collectively attracted €17bn of demand spread over more than 900 orders, but the pick of the bunch were two borrowers from Spain and Portugal who attracted by far the highest levels of over-subscription over the broadest range of investors.

    • 10 Jan 2014
  • CFF free to issue after dropping ABS

    Compagnie de Financement Foncier no longer holds securitisations on its balance sheet, freeing it to issue benchmark deals that comply with the Capital Requirements Directive and will be repo eligible.

    • 10 Jan 2014
  • Tough book builds point to core covered saturation

    Thursday’s suite of covered bond issues from Australia and Switzerland underscored a growing impression among bankers that pricing core transactions is taking more forethought and effort. Whereas deals were invariably easy to price last year, demand seems to have become more finite. Books are taking longer to build as investors need more cajoling to meet issuers’ funding targets, in stark contrast to peripheral credits.

    • 09 Jan 2014
  • Bumper start for FIG as periphery proves its popularity

    Credits from Europe’s periphery are raking in orders in the FIG funding markets, but investors are also going starry-eyed at the sight of high-yielding subordinated debt from core jurisdictions. On Tuesday there was just under €11bn equivalent in supply across senior, covered bonds and sub debt in euros and sterling, with Italian credits dominating senior, while sub and covered let core European names get in on the action.

    • 08 Jan 2014
  • Peripheral demand bodes well for follow-ons

    Portuguese and Spanish issuers, Caixa Geral de Depósitos and Banco Mare Nostrum launched deals on Wednesday that, despite being aggressively priced, were heavily oversubscribed. The deals showed demand is clearly skewed to higher yielding credits, boding well for second and third tier peripheral issuers who are looking to cut central bank funding dependence.

    • 08 Jan 2014
  • Core in demand but premiums may be needed

    ANZ and La Banque Postale attracted good demand for their covered bonds on Wednesday, following solid investor endorsements for deals from core Europe on Tuesday. But in contrast to the periphery, where performance is more assured, core names offer limited performance potential and issuers are more likely to need premiums to get their deals away, said bankers.

    • 08 Jan 2014
  • The Cover View: EC must overrule EBA on covered bonds

    The European Commission must ignore the counsel of the European Banking Authority, which has called for covered bonds to remain as level 2A assets within Basel III’s Liquidity Coverage Ratio. It must instead base its decision, due by June 30, on the EBA’s analysis that covered bonds are as liquid as sovereign bonds and good enough for Level 1 of the LCR.

    • 07 Jan 2014
  • Core deals swept up as peripheral mandates mount

    The year’s first batch of covered bond issues have been easily absorbed by a wide range of investors producing comfortably oversubscribed books. The first peripheral deal mandate has come from Portugal and another from Spain is expected shortly.

    • 07 Jan 2014
  • Generali and Abbey to kick off senior as Europe eases into gear

    Italian insurer Generali and UK lender Abbey National have both mandated leads for euro senior deals with more issuers expected to follow later this week, once several European countries return to work after Monday’s Epiphany holiday.

    • 06 Jan 2014
  • Italian covered law update is positive, says Moody’s

    Changes to Italy’s covered bond law improve the segregation of cover pool assets and are good for the market, according to Moody’s.

    • 06 Jan 2014
  • Finnish, French, Australian and UK deals kick off 2014

    Four issuers from Finland, France, Australia and the UK are set to price covered bonds on Tuesday and Wednesday. Market conditions are broadly constructive, especially for higher yielding names, said bankers, but core issuers might have to offer concessions to tempt investors in a busy start to the year.

    • 06 Jan 2014
  • Korea and Singapore set out covered bond frameworks

    South Korea and Singapore are all looking to drive covered bond issuance this year with new frameworks.

    • 06 Jan 2014