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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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Spanish pharmaceutical bank specialist, Bancofar and its parent, Banco Caminos, which provides finance to civil engineers, have set up small covered bond programmes that have been assigned an Aa1 rating by Moody’s. -
The European Central Bank has warned that some banks face a sharp spike in the cost of their bond funding, as the economic fallout from the coronavirus pandemic begins to translate into credit rating downgrades.
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Close Brothers returned to the public market after a two year absence on Thursday, launching a 10 year sterling deal from its operating company at a very flat level compared to its shorter dated bonds.
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BNP Paribas took advantage of the thirst for duration in the euro bond market on Thursday, offering investors a chance to get hold of long dated non-preferred senior paper.
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Covered bond traders are paring back inventory as they approach the end of the year, though there are a few sectors of the market where they intend to hold positions. High redemptions in the first half of the year will support spreads but January’s issuance glut may not see a rise in new issue premiums.
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The outlook for Asian covered bond supply will have improved slightly in the wake of Tuesday’s deal from United Overseas Bank, particularly among Singaporean lenders. But issuance from Australia and New Zealand is expected to be more limited, reflecting their banks' priority to get ahead with regulatory funding.
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