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With masses to fund and spreads super-tight, banks will race to market, but central banks are expected to tighten
◆ Smaller institutions attract investors' attention with higher yielding capital ◆ Shawbrook issues its first benchmark ◆ LV= returns to bond market after 13 years
US bank eyes one of the tightest US preferred resets as BBVA goes for subordinated, senior combo
Data
Banks could rush to issue as fast as possible, taking advantage of remarkably tight spreads
Growing pipeline and fiercer competition had threatened to shake the darling bonds of May
Uncertainty in Middle East peace negotiations may reignite alarm, but investors remain willing as long as issuers pay to play
Tweaks to trading book rules will be next stage of competition
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Oberbank sold its first senior non-preferred bond on Tuesday. The issuer's investor work paid off as more than 70 accounts poured into the sub-benchmark deal, which was almost two times covered. -
Royal Bank of Canada issued a tightly priced €1.25bn 10 year covered bond on Tuesday. While it only attracted just enough demand for it, the long tenor, investor diversification, cost of funding and deal size were positives for the borrower.
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Korea’s KEB Hana Bank attracted a €2bn order book for its €500m debut covered bond on Tuesday, boosting hopes for an improvement in the secondary market performance of similar deals from South Korea that offer outsized spread pickups.
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Fitch has upgraded the Co-operative Bank's ratings by one notch to a single B, following the issuance of £200m worth of senior debt for the minimum requirements for own funds and eligible liabilities (MREL) last November.
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Even though technical factors are highly supportive for covered bonds, traders say they are unwilling to lift offers, reflecting increased anxiety about limited performance potential and an underlying concern that credit market sentiment is less sure-footed that at the start of this year.
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Credit Suisse issued a two-part covered bond in Swiss francs on Monday, choosing to limit the deal sizes in order to ensure a tight spread and low yield.
Polls and awards
Don't miss your chance to choose this year's Bond Award winners
The covered bond market gathered in Seville to celebrate its standout deals, institutions and individuals
Last chance to vote for the best winning deals, individuals and organisations in the covered bond market
The leading banks, issuers, individuals and other market players were named at GlobalCapital's flagship industry dinner in London
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