France

Neil Sankoff, head of senior funding, in HSBC's global balance sheet management division, has spoken to The Cover about Tuesday’s €1.25bn 10.5 year Obligation à l'Habitat and the bank’s global funding strategy. With no formal marketing, the deal was all about timing, he said.

BNP Paribas has jumped in with a €1bn seven year French covered bond, following the excellent reception for HSBC France’s Obligation à l'Habitat and Münchener Hypothekenbank's Pfandbrief.

Crédit Agricole Home Loan SFH was the only borrower to visit the euro covered bond market this week. The issuer sold a €250m tap of a 12 year bond, although syndicate bankers disagreed over the premium the increase offered relative to OATs and the original deal.

Caisse de Refinancement de l'Habitat (CRH) executed a lighting fast long six year covered bond early on Thursday morning, to avoid any potential volatility from the European Central Bank meeting on the same day. But the deal was also CRH’s smallest benchmark print in years, indicating a much reduced need for secured funding across France’s banking system.

Crédit Agricole braved an uncertain market on Thursday to launch its first Obligations à l’Habitat of the year. It was rewarded for its courage with the largest covered bond print in over a month and a final spread inside its secondary curve, proving the primary window remains wide open for core issuance.

Caisse de Refinancement de L’Habitat has sold the first Swiss franc covered bond in almost six months. Its good reputation among Swiss investors and upcoming redemptions helped CRH to price the deal through its Swiss franc curve.

The former Dexia Municipal Agency, now Caisse Française de Financement Local (Caffil), is considering whether to appeal against a French court judgement over three structured loans it made to a local authority. With as many as €10bn of similar loans in its €70bn collateral pool, the market is watching developments closely.

Moody’s has upgraded Caisse Francaise de Financement Local’s covered bonds to Aaa from Aa2, following a similar move by Standard & Poor’s. The upgrade came after all three major rating agencies rated CFFL’s holding company, Société de Financement Local (SFIL) double-A. CFFL’s previous owner Dexia Credit Local was rated Baa2.

Cédulas have dominated covered bond issuance so far in 2013, aided by a remarkable rally that has seen nine deals printed this week. However, oversubscription rates have dwindled this week, and both core and periphery issuers may need to increase what they offer investors to get their attention in a crowded market.

The primary market picked up momentum on Thursday with three benchmark deals and one benchmark sized tap being syndicated. ANZ, Bankinter, KBC and Compagnie de Financement Foncier (CFF) unearthed a over €3bn of demand.

Two French covered bond issuers have very different outlooks for 2013, with Dexia Municipal Agency on an upward path, while Compagnie de Financement Foncier (CFF) faces rating uncertainty, which it hopes to resolve soon. Traders believe the spread differential for the two issuers is likely to converge this year and may even cross over.

Société Générale’s Russian subsidiary, DeltaCredit Bank, is expected to place notes of its recently priced covered bond on Tuesday, its treasury told The Cover. It is expected to return with further deals next year as the Russian fledgling covered bond framework continues to restrict local issuers to their domestic market.