Covered Bond Opinion

At first glance the flurry of Italian banks entering the capital markets — including such unfamiliar names as Banca Popolare Dell’alto Adige (BPAA) and Banca Sistema — is an indication that international investors will lap up the debt of Italian minnows just as readily as they do for larger lenders in other peripheral Eurozone countries.

National Bank of Greece’s ability to attract a high oversubscription for its three year covered bond on Tuesday showed it is on the road to recovery. But without sovereign debt relief, the precarious state of Greece’s government finances will continue to blight the economy and its fragile banks.

Restricted tier one (RT1) bonds still do not make sense for Europe’s insurance industry and the asset class needs benchmark issuance before it can become a significant market in its own right. But the first deal in a major currency from ASR Nederland will be a very important line in the sand.

Italy’s banks and politicians are worried about the European Central Bank’s non-performing loan crackdown. They are right to worry — but the answer is bankruptcy reform.

Chinese issuers and investors are likely to be largely absent from the dollar bond market for the next few weeks, as the country prepares for a crucial meeting of Communist Party officials. The slowdown will be a good chance for issuers from elsewhere in the region to tap the market — and demonstrate whether Asia’s bond market can remain standing without Chinese liquidity.

For politicians looking for policy tools, bank capital regulations are a blank canvas. But using prudential regulation to direct lending to favoured causes lacks transparency, obscures difficult decisions and piles up risks.

This week’s slate of covered bonds saw record after record broken — a mania that was evident across the whole FIG sector. With European rates set to remain at their lows throughout next year and the macroeconomic backdrop continuing to improve, it is difficult to see what could spoil the party.

The FIG Idea studies the form for bank capital's most important competition of the year — set to run this October (or perhaps not).

We would all like to believe green bonds are helping cut carbon, but if banks don’t change their lending policies, they only serve to make us feel good.

If the market commentariat thinks that the buy-side should be worried by upcoming European Central Bank tapering, then someone has yet to tell investors.