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This year's cumulative total issuance by financial institutions outstrips 2025's levels
◆ Spanish covered was only new issue on Wednesday ◆ Tenor has been well-issued in past week ◆ Banker said market to slow from here
Hong Kong dollar and offshore renminbi bid returns, while dollar callables lose momentum
Data
Contrasting investor receptions in euro and sterling markets but new issue premiums rise in both
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
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Mortgage payment holidays and falling residential and commercial real estate prices will likely lead to a deterioration in the credit quality of the collateral pools securing covered bonds. But those programmes have other protective measures that will keep investors well insulated. And, if they need more protection, issuers can easily assuage their and rating agency concerns by adding collateral. -
Financial institutions with funding needs that are holding off in anticipation of better issuance conditions are doing it wrong. Waiting until the other side of earnings season to bring deals will likely prove a mistake.
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Canadian banks should be applauded for funding themselves in public with deals bought by real investors in a range of currencies at actual market clearing levels — astonishing though that may be for the many entitled European issuers that have shamelessly become accustomed to central bank funding.
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Covered bonds easily deliver the most competitively priced funding for banks, but the real value for issuers lies in the long end which, for the time being, is too expensive.
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A measured reopening of the primary bond markets in the last month has left banks in a good place to launch new deals after first quarter results, according to FIG DCM officials.
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Supervisors are encouraging financial institutions to use all of their capital and liquidity buffers as necessary during the coronavirus crisis, signalling that lenders will be given a "significant" amount of time to restore their regulatory ratios to adequate levels.
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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