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Contrasting investor receptions in euro and sterling markets but new issue premiums rise in both
Bankers predict steady flow of covered bonds issuance over coming weeks despite recent spike in activity
The conditions are in place for the return of big-ticket M&A to create a European banking champion that is sorely needed — provided the politics of it don’t get in the way
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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Argenta Spaarbank has mandated leads to issue its debut covered bond deal. The mandate follows the National Bank of Belgium's decision to grant it a covered bond licence, taking the number of issuers in the country to five, boosting the prospects for supply this year. -
La Banque Postale (LBP) sold €500m of tier two paper this week, marking the normally rare issuer’s second sale in the format in just over three months.
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BNP Paribas is set to redeem one of its legacy tier one bonds in full this quarter, as more banks follow recent guidance from the European Banking Authority and clear out old capital instruments.
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Solid demand from investors for Woori Bank's sustainable bond on Monday allowed the South Korean borrower to price its $550m deal at an ultra-tight spread.
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An undercapitalised bank in the crosshairs of a market rout can expect counterparties to demand higher margin calls, particularly when a lot of its assets are already encumbered, as is the case at many European banks. This is a problem of the European Central Bank’s making and one that only it can fix. Making covered bond repo haircuts more severe would be a good place to start.
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The covered bond market bounced back from last week’s temporary supply indigestion on Monday, following strong deal outcomes for DZ Hyp and Société Générale, which issued the tightest French transaction of the year.
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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