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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
Conducive credit markets and tight spreads to lure issuers as risks loom on the horizon
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
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Hesitant covered bond issuers, that had been waiting for the European Central Bank to commence buying under its Pandemic Emergency Purchase Programme (Pepp), may no longer have an excuse to wait and should return to the market soon — particularly since funding levels are cheap relative to senior unsecured, but also because wider spreads may reflect the deterioration in credit risk as opposed to liquidity risk. -
The volume of new euro senior debt sold by banks has hit €10bn this week, following deals from Barclays, Credit Suisse and NatWest Markets on Thursday. Yield and spread levels remain high, but market participants have been delighted to see investors throwing their confidence behind new transactions in the middle of the coronavirus crisis.
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New senior bank bonds are proving attractive to investors at about 40bp-50bp or more over secondary levels, with UK issuers Lloyds and HSBC joining US peers in returning to the new issue market this week.
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Bank of Nova Scotia issued its first dollar covered bond benchmark since 2016 on Wednesday. The deal follows a series of retained Canadian dollar covered bonds that were pledged to the Bank of Canada after it recently broadened repo eligibility to include the asset class.
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The Eurogroup made no progress towards creating a common EU debt instrument on Tuesday night, but member states will be able to fund their responses to the coronavirus crisis through a new credit line with the European Stability Mechanism.
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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