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◆ Strong outcome despite French risk concerns ◆ Participation from a 'who's who' of sterling real money ◆ Sterling market stronger than euros
◆ CFF tightened spread by 6bp ◆ CFF and Hypo Vorarlberg Bank paid small concessions ◆ NN Bank attracted largest order book of the day
Despite the boost in demand, overall unsecured supply still lags behind 2025, with the bulk of recent supply coming in covered bonds
Data
Observers blame slower bookbuilding on deal-specific factors but others see warning shots for whole market
Covered market provides 'the deepest pocket of demand' among FIG asset classes
Capital deals and a tight Nordic senior print point to what lies ahead for issuers
The single currency stands out as the most attractive funding source while the US dollar market remains open in size
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There was a clear shift in pricing dynamics last week with larger movements from initial price thoughts, across all sectors but particularly in the markets that carry higher inherent risk. At the same time though, real estate companies drove up the average concession paid in the corporate sector, but that measure fell in the rest of the primary market. -
A tightening in spreads on senior unsecured bank bonds and wider covered bond spreads has made the latter an even less attractive funding market for issuers which, added to a plethora of additional factors, means that market could be facing its lowest year for issuance in 20.
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Yorkshire Building Society paid a rare visit to the euro market on Tuesday as it offered a small premium for a €600m preferred senior deal. Bankers expect issuance to slowly dry up over the next few weeks as the market prepares for the summer break.
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UBS made its first foray into the green bond market as an issuer on Monday, landing a €500m operating company deal at a level bordering on zero yield, which could embolden other lower spread issuers to follow. The visit to euros was paired with a seven year deal in the Swiss bank’s home market.
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Banco BPM dropped into the euro market on Tuesday for its third tier two deal in about 10 months, as the Italian lender continues to whittle down its financing costs.
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Sebastiano Laviola, director of strategy and policy coordination at the Single Resolution Board, said there is still plenty of work to do to refine bank failure rules in Europe but praised lenders for getting on well with issuing for the minimum requirements for own funds and eligible liabilities (MREL) during the pandemic.
Polls and awards
Cast your vote now to decide this year's covered bond award winners and express your views in our new market survey
Bond market's leading performers recognised at GlobalCapital's annual awards ceremony
The awards recognise the market's leading deals, issuers, banks and other participants
The winning institutions and individuals will be revealed at the awards dinner on June 17 in London
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