France

Funding officials at French mortgage lender 3CIF have told The Cover they had no choice but to keep investors in the dark regarding the suspension of trading in the firm's debt from Euronext and the Luxembourg stock exchange just over two weeks ago.

Borrowers could decide to switch senior projects into covered trades, syndicate bankers told The Cover. This would follow the example Nordea set in April when it turned a planned senior deal into a blow out seven year covered deal.

The radio silence surrounding the suspension in 3CIF bonds this week is a textbook case of How Not To Do Investor Relations.

This week’s shocking suspension of Caisse Centrale du Crédit Immobilier de France’s covered bonds from Euronext and the Luxembourg stock exchange has left capital market participants bewildered and angry.

France’s Caisse de Refinancement de l'Habitat has held back its possible deal after the market weakened and uncertainty continued over the trading suspension of CIF Euromortgage’s covered bonds. As parent company 3CIF’s silence over the suspension stretched into its third day, one banker told The Cover the lack of communications with investors was “a disaster”.

Non-Eurozone supply remains in high demand, but Caisse de Refinancement de l'Habitat (CRH) could be the first core European name to test the water this week, syndicate bankers told The Cover.

Despite the holiday shortened week, activity in the secondary covered bond market has been relatively good. Though not all houses attest to seeing flows, some banks have seen quite a lot. German and Scandinavian markets are very well supported, the UK has performed very well, France is mixed and Spain is offered.

Caisse de Refinancement de l’Habitat (CRH) issued its second big Swiss franc covered bond in three months, a Sfr375m dual trancher, bringing its 2012 supply in the currency to Sfr1.025bn.

Primary activity in the European covered bond market focused on France on Tuesday after BPCE said it would tap its 10 year. There was a mixed reception to the news amid fears that OAT underperformance would hit demand, but bankers countered that investors were desperately searching for yield.

Germany’s Helaba broke ranks with cautious covered bond issuers on Tuesday to launch the first euro benchmark trade for two weeks. The rare borrower found strong demand for a €1bn public sector backed transaction, and another deal out of core Europe is expected on Wednesday, said syndicate bankers.

Covered bond supply should restart next week given a stable opening, said syndicate officials on Friday, and several issuers are looking to launch trades. But with upcoming elections in France and the market still full of uncertainty after the renewed volatility of early this week, headline risk could keep second quarter supply muted.

Sovereign markets have started to stabilise but covered bonds have lagged this move and remain under pressure in the secondary market. The focus has been on Spain but dealers also reported weakness in French covered bonds. In the primary market, issuance hopes remain dim, though bankers think there may be room for a Swedish or Finnish deal.