France

Though the covered market was quiet on Friday, market participants can look back on highly successful week in which almost Eu7bn in euro benchmarks was issued. After faltering supply in April UniCredit analysts report that covered bonds are on track for another record month. Issuance thus far in May is almost Eu20bn, less than Eu2bn short of the record total supply for that month.

Caisse Refinancement de l’Habitat on Wednesday added to this week’s sequence of heavily oversubscribed issues from borrowers in core jurisdictions. The Eu1.25bn trade, which was priced through Barclays Capital, Crédit Agricole, HSBC, Natixis and Société Générale, was the second French long 10 year within a week, but investor demand for core paper is so buoyant that the order was still more than twice covered.

Benchmark issuance in the covered market continued for the third straight day on Wednesday, heralding a return to the form of early in the first quarter. Caisse de Refinancement de l’Habitat on Wednesday launched the second French long 10 year within a week, keeping books open for only half an hour for a Eu1.25bn trade.

Two European banks have issued benchmark dollar covered bonds this week, taking advantage of US investor interest in triple-A assets.

Issuance from Italy, the fastest growing euro covered bond segment, has this year already exceed by almost 20% the total amount sold from that jurisdiction in 2010, according to Natixis analysts.

Société Générale priced the second euro Obligations de financement de l’Habitat on Tuesday, at a level 20bp inside of BPCE’s debut OH with the same maturity in early May. Syndicate leads said a strong reception had been predicted following an in-depth roadshow the previous week, though others said the scale of demand for the debut deal had been surprising nonetheless.

Société Générale convinced almost 150 accounts to participate in its debut euro Obligations de financement de l'habitat. The trade exceeded the already high expectations of syndicate officials following the first euro OH from BPCE.

Société Générale SFH has mandated BBVA, Crédit Agricole, Danske, ING, SG and UniCredit for its inaugural euro Obligations de financement de l’habitat, which will be launched in the near future.

CIF Euromortgage surprised market participants on Thursday, bringing a highly successful 10 year trade to a market many had deemed unreceptive to longer tenors. While Bayerische Landesbank and Eurohypo opted for short dated issuance, bookrunners on CIF’s Obligations Foncièrs benchmark trade were not initially confident in the choice of maturity.

After more than a week without benchmark euro issuance, three such deals were launched from core Europe on Thursday, as Eurohypo and Bayern LB came to market at the short end of the curve, while CIF Euromortage opted for a long dated transaction.

CIF Euromortgage mandated for, and then opened, a long 10 year euro trade through BNP Paribas, Deutsche Bank, DZ Bank, Natixis and Nomura. The leads will price the benchmark Obligations Foncièrs later on Thursday, having gone out with guidance of the high 70s over mid-swaps.

Société Générale is expected to finish roadshowing its new covered bond programme on Friday. Given robust market conditions, a launch could follow as soon as next week. The programme structure is unusual for being backed by RMBS, as opposed to mortgage loans. In this sense it is similar to CIF Euromortgage’s long standing programme and Intesa’s Eu20bn OBG programme launched last year.