Covered Bonds - All Articles

  • Perenna applies to become first pure UK covered bond bank

    Perenna has applied to become the first UK covered bond bank and plans to issue 30 year fixed rate mortgages next year, using the Danish covered bond system that limits mismatches between the terms of the mortgages and the bonds that fund them.

    • 30 Oct 2020
  • Nord/LB Lux’s LCR status to be grandfathered

    Covered bonds issued by NordLB’s Luxembourg subsidiary are set to become ineligible for the liquidity coverage ratio from July 2022, according to a draft amendment published this week by the European Commission.

    • 29 Oct 2020
  • Covered Bond Directive implementation 'a bit behind'

    Only a few countries have made headway in the implementation of the Covered Bond Directive and, with just a few months left, there are growing concerns that its transposition will be delayed, said bankers attending a virtual event sponsored by the European Covered Bond Council (ECBC) on Wednesday.

    • 29 Oct 2020
  • Covered bonds set for safety bets major investor

    The covered bond supply outlook is dismal and could worsen but that means spreads are well protected, even if competing supply in the rates market from the EU ramps up, a major investor told GlobalCapital on Wednesday.

    • 28 Oct 2020
  • Covered bond reward for risk is ‘very bad’

    Covered bond spreads are unlikely to widen much say dealers, plenty of whom are long inventory, especially in recently issued deals. Deals that are ineligible for central bank buying programmes, however, are vulnerable.

    • 27 Oct 2020
  • MuHyp prices rare 20 year flat to covered curve

    Münchener Hypothekenbank (MuHyp) issued a €500m 20 year flat to fair value on Tuesday even though market conditions were volatile.

    • 27 Oct 2020
  • Canadian covered bond issuers to turn on the taps

    Bankers are confident that Canadian covered bond issuance will resume after the Bank of Canada withdrew the repo eligibility of retained covered bonds, while honouring existing repo deals. But bankers are split as to whether supply will restart this year or be deferred until next year.

    • 27 Oct 2020
  • ECB: almost half of banks are finished with TLTRO III

    Nearly half of Europe’s banks do not intend to participate in the next rounds of the Targeted Longer-Term Refinancing Operations (TLTRO III), according to the results of a new survey published by the European Central Bank this week.

    • 27 Oct 2020
  • MuHyp to issue rare 20 year Pfandbrief

    Muenchener Hypothekenbank has mandated leads for a rare 20 year covered bond benchmark, the first from a German issuer this year and only the third from the whole market. Rates have collapsed rendering the recently popular 15 year tenor less attractive.

    • 26 Oct 2020
  • Investors spot a silver lining in record retained covered bond issuance

    Investors are sanguine about the fact that covered bonds pledged for repo with central banks hit a new record this year. Although issuers acknowledge the need to appear regularly with benchmarks in the public market, some have scaled back, but this is likely to prove temporary.

    • 26 Oct 2020
  • Science-based targets could help banks wrestling with climate risk

    UK banks and building societies are struggling with difficult aspects of incorporating climate change into their risk management, as demanded by the regulator, a PwC survey has found. The answer to some of their problems could be a non-risk initiative: science-based targets.

    • 22 Oct 2020
  • Indian dual recourse flies as covered bond hopes build

    Dual recourse structures have become increasingly popular in India after last year’s debut from Kogta Finance. And with the sanctity of bankruptcy remoteness successfully tested in the courts, sentiment towards such structures has improved further. This could help pave the way for a national champion bank to test appetite for Indian covered bonds, which would offer the country's lenders a source of long-term diversified funding that they can't get from deposits.

    • 22 Oct 2020
  • DZ hits covered bond sweet spot with well-timed Pfandbrief

    DZ Hyp returned to the covered bond market for the fourth time this year on Thursday to issue a €1bn eight year mortgage Pfandbrief. The deal showed that any uncertainty over the relative value of covered bonds has been firmly swept away after the European Union’s blow out debut earlier this week.

    • 22 Oct 2020
  • Coventry takes Godiva to covered bonds

    Coventry Building Society (CBS) has set up a second covered bond programme that is secured exclusively on the mortgages originated under its buy-to-let Godiva platform, which had previously been funded through its Mercia RMBS programme. Although the covered bonds require more collateral to reach the same rating, they offer greater funding flexibility as they can be pledged for repo and are eligible for the liquidity coverage ratio.

    • 21 Oct 2020
  • Singapore slings old 4% covered bond limit

    The Monetary Authority of Singapore (MAS) has substantially increased its covered bond issuance limit which had stood at 4% of assets on an issuer’s balance sheet. This, along with very strong market conditions, should help to induce the country’s borrowers, which have not printed in euros for more than two years, to make an appearance before the year is out.

    • 21 Oct 2020
  • Aareal prices inside curve in show of Pfandbrief strength

    Aareal Bank issued a short six year Pfandbrief on Wednesday at a deeply negative yield and with a negative concession. Investor demand was impressive, illustrating that Pfandbriefe, twinned with Aareal’s loan origination standards, were sufficient to offset any concern over the hotel and retail exposures in its collateral pool. At the same time DZ Hyp has mandated leads for an eight year Pfandbrief.

    • 21 Oct 2020
  • Pfandbrief’s soft bullet highlights key differences

    A proposed change to the Pfandbrief law introducing a soft bullet maturity is designed to harmonise Germany’s covered bond regime with the rest of Europe’s, as envisaged under the EU’s Covered Bond Directive. However, it could highlight the vast differences in how soft bullet covered bonds are repaid following extension triggers.

    • 20 Oct 2020
  • Pfandbriefe fortified against Covid

    The impact of Covid-19 lockdowns on the hotel and retail loans securing German Pfandbriefe is likely to present serious challenges. But conservative lending and high interest rate coverage ratios provide solid protection, so managing a prospective rise in risk-weighted assets will likely be the bigger challenge for certain issuers, said bankers on Tuesday.

    • 20 Oct 2020
  • Covered bond buying steps up as EU trades up in grey market

    The technical outlook for covered bonds had always been supportive, but after it emerged that newly mandated EU bonds were trading sharply higher in the grey market on Monday, traders were even more confident, especially for deals in the ultra-long end of the curve, such as CFF’s transaction issued on Monday.

    • 19 Oct 2020
  • CFF slots in ahead of the EU with first negative yielding 15 year

    Compagnie de Financement Foncier (CFF) was able to raise €500m of 15 year funding flat to its curve on Monday. But, in anticipation of the EU's 10 and 20 year dual tranche mandate, announced the same morning, investors of the first negative yielding 15 year covered bond showed a degree of price sensitivity.

    • 19 Oct 2020
  • Central banks and climate change: Lagarde becomes leader

    Long used to scanning the horizon for risks, central banks have belatedly woken up to the biggest one of all — climate change. Monetary policy has so far been ignored — but the European Central Bank, until now on the fringes of this issue, is plunging in

    • 15 Oct 2020
  • Liquidity makes a market, the ECB takes it away

    Despite the Eurozone covered bond market’s huge size, its inherent liquidity is dwarfed by much smaller sectors outside the trading block — effectively meaning ‘the market’ is slowly but surely becoming impotent.

    • 15 Oct 2020
  • Deal flurry shows rewards await the quick and the brave in FIG

    FIG borrowers may be well funded, but rates are low and market conditions are good enough to support opportunistic issuance — as was shown this week by a slate of deals across the capital structure. Given a volatile end to 2020 is likely, issuers will need to stay alert and take advantage of funding windows as they arise, write Frank Jackman and Bill Thornhill.

    • 15 Oct 2020
  • EC sees renovation revolution, as ECBC hits go

    The European Commission has unveiled bold plans to promote the renovation of existing housing stock in a bid to improve energy efficiency and so cut EU’s carbon footprint and provide a much-needed stimulus to the economy. At the same time, the European Covered Bond Council is implementing its energy efficient mortgage plan that aims to improve the supply of collateral securing green covered bond issuance.

    • 15 Oct 2020
  • Debut BSH enjoys smashing Pfandbrief hit

    After an extensive marketing period, done with the intention of issuing a benchmark sized deal, Bausparkasse Schwäbisch Hall’s first Pfandbrief, issued on Thursday, attracted more demand, at a tighter spread and a longer duration than a Pfandbrief its compatriot building society, Wüstenrot Bausparkasse, issued this week.

    • 15 Oct 2020
  • BSH to follow Wüstenrot’s Pfandbrief lead

    Bausparkasse Schwäbisch Hall (BSH) mandated leads for its debut covered bond on Wednesday. The benchmark sized deal will take advantage of the strong demand seen for Tuesday’s Pfandbrief from German building society peer, Wüstenrot Bausparkasse.

    • 14 Oct 2020
  • CEE covered bond laws advance

    The Baltic covered bond market is expected to take another stride forward with the advent of Latvia’s draft law, which currently is being debated in parliament. At the same time, the European Bank for Reconstruction and Development (EBRD) has been working closely with the Bulgarian, Croatian and Ukrainian authorities to help develop the basis for their own covered bond laws.

    • 13 Oct 2020
  • Increased Wüstenrot Pfandbrief hits benchmark jackpot

    Wüstenrot Bausparkasse attracted exceptionally strong demand for its seven year Pfandbrief launched on Tuesday, causing the issuer to increase the deal’s size from an originally planned sub-benchmark size to benchmark. In so doing it further improved the scale and quality of the order book reflecting improved regulatory treatment and index inclusion for the deal.

    • 13 Oct 2020
  • ECB kills covered bond secondary turnover

    Secondary covered bond market turnover has fallen since the European Central Bank's Covered Bond Purchase Programme (CBPP3) began, with the ECB accounting for an unprecedented proportion of overall turnover, according to a report published in the European Covered Bond Council’s fact book, published last Friday.

    • 12 Oct 2020
  • ECB's Vansteenkiste engages with green TLTRO idea

    The European Central Bank's Isabel Vansteenkiste welcomed a proposal for green Targeted Longer-Term Refinancing Operations (TLTROs) on Monday, but talked through what she saw as some concerns with the idea.

    • 12 Oct 2020
  • Caffil jumps in front of cheaper EU, sparking supply hopes

    Caffil attracted robust demand for its fifth covered bond this year on Monday, thanks to the positive yield on offer at the unusual 15 year maturity. But with a wave of cheap European Union 15 year supply expected to surface before long, other issuers may try to follow Caffil's lead and jump in ahead.

    • 12 Oct 2020
  • Wüstenrot mandates leads for Pfandbrief

    Wüstenrot Bausparkasse mandated leads on Monday for a seven year Pfandbrief in sub-benchmark size. The German building society’s transaction is set to emerge ahead of another from Bausparkasse Schwäbisch Hall which is also due soon.

    • 12 Oct 2020
  • Banks enjoy last hurrah ahead of difficult winter

    Deal arrangers expect bank bond supply will peter out after a flurry of deals this week. Issuers have been enjoying fantastic conditions, but most of them have finished their funding plans early so they can lay low throughout a much-feared fourth quarter. Tyler Davies and Bill Thornhill report.

    • 08 Oct 2020
  • Covered bonds to slow to a trickle

    Despite robust redemption volumes, the outlook for covered bond supply over the remainder of 2020 is poor with some bankers expecting no more than a dozen euro deals.

    • 08 Oct 2020
  • Epic squeeze envisaged unless ECB steps back from covered bonds

    The European Central Bank bought more covered bonds in September than it has done for months and still faces a mammoth task to replace deals due to be redeemed this year. With eligible issuance unlikely to much exceed €10bn, a squeeze of epic proportions is in store.

    • 08 Oct 2020
  • Sumitr enjoys solid outcome for first outing

    Sumitomo Mitsui Trust Bank (Sumitr) mustered a reasonable order book for its debut contractual covered bond issued on Wednesday, and was able to meet its minimum size ambition at a fair spread.

    • 07 Oct 2020
  • Investors swoon to MMB’s covered bond

    My Money’s Bank’s 10 year Obligations Foncières issued on Wednesday attracted strong demand, largely due to the spread on offer.

    • 07 Oct 2020
  • Germany seeks harmony over Pfandbrief maturities

    The German Ministry of Finance has requested feedback on a draft amendment to the Pfandbrief Act that seeks to bring the country’s laws into line with the EU covered bond directive. The most contentious aspect is the inclusion of a soft bullet maturity.

    • 06 Oct 2020
  • YBS attracts outstanding covered bond demand

    Helped by the rarity of UK issuance in euros, Yorkshire Building Society’s seven year euro deal on Tuesday was one of the most oversubscribed covered bonds of its size ever launched by any UK issuer, and was priced flat to fair value.

    • 06 Oct 2020
  • French covered bonds: firm foundations

    At around €300bn, France is the world’s second largest covered bond market. Yet, unless issuers consider pre-funding for bonds that fall due early next year, supply prospects for the remainder of this year are dim. This, along with stability in the French economy, property market and covered bond ratings, should stand the asset class in good stead.

    • 05 Oct 2020
  • Juicy covered bond trio line up

    Yorkshire Building Society (YBS) has mandated leads for the first euro covered bond from the UK since January, My Money Bank has also mandated and, after concluding a roadshow, Sumitomo Mitsui Trust Bank is due this week too. All three bonds will offer a temptingly high spread.

    • 05 Oct 2020
  • Bluestep soars with second Swedish success

    By offering a hefty pick-up over national champions, Bluestep Bank, a Swedish non-standard mortgage lender, attracted a hefty order book for the second deal from its newly established covered bond platform this week.

    • 02 Oct 2020
  • ECB can do better than a green TLTRO

    The ECB is mulling the idea of green Targeted Longer-Term Refinancing Operations to boost green lending. It's a noble aim — but it should work with the policies it has first, if it is serious about environmental impact.

    • 01 Oct 2020
  • Syngenta reaps blowout Swissie deal

    Syngenta, the agricultural chemical and seed company, returned to the Swiss franc market this week for its second Swissie bond of the year — a blowout three year deal that surpassed the market’s expectations.

    • 01 Oct 2020
  • DNB hits covered bond market in size

    DNB Boligkreditt on Thursday issued its first euro covered bond since January 2019 in large size, pricing inside its own curve — once again underscoring the strong technical backdrop to the market.

    • 01 Oct 2020
  • NBG gives Greece its first green bank bond

    National Bank of Greece (NBG) has become the lowest rated bank to issue green debt, after winning two times as much demand as it needed for a €500m senior bond on Thursday. The trade formed part of a flurry of green issuance in the FIG market, alongside new deals from Banque Fédérative du Crédit Mutuel and Mizuho Financial Group.

    • 01 Oct 2020
  • CCDJ issues rare dollar covered bond

    Fédération des Caisses Desjardins du Québec (CCDJ) issued the first Canadian covered bond in dollars since May on Wednesday flat to where the major Canadian banks issue senior unsecured debt.

    • 01 Oct 2020