France

Italy’s Intesa Sanpaolo relaunched issuance of covered bonds secured by residential mortgage backed securities when it yesterday (Wednesday) sold a Eu1bn five year issue that a syndicate official at one of the leads said successfully overcame reduced line availability for Italian debt and some resistance to the deal’s structure. Axa Bank Europe is expected to provide a second test of appetite for such product shortly.

The French parliament has passed without amendments a law introducing a new type of legislative covered bond, obligations à l’habitat (OHs).

Two inaugural euro covered bonds backed by residential mortgage backed securities were this (Monday) being flagged for possible launch this week.

Investors flocked to a Eu2bn Royal Bank of Scotland covered bond today (Thursday), attracted by the opportunity to lock in a 4% coupon for 10 years, while a Eu1bn three year Dexia Kommunalbank Deutschland issue was also oversubscribed as primary market activity stepped up a gear following a Eu1bn deal from BNP Paribas Public Sector SCF yesterday.

BNP Paribas Public Sector SCF launched a Eu1bn five year obligations foncières today (Wednesday) that is only the fourth French benchmark covered bond sold in six-and-a-half weeks, while yet another Italian is planning to tap the market and the UK’s Royal Bank of Scotland is lining up a 10 year Regulated Covered Bond.

The covered bond market is in good condition and generally open for issuance, syndicate bankers reported today (Monday), but with no new mandates publicly announced since last Thursday a deal from Italy’s Intesa Sanpaolo was this morning the most concrete new issue project in the pipeline for the week.

The European Central Bank has introduced a rule exempting non-Ucits covered bonds from provisions prohibiting a counterparty from submitting as collateral an asset that is issued or guaranteed by itself or by any other entity with which it has close links.

The first obligations foncières issued by Axa Bank Europe SCF will be backed by a Eu1.5bn senior tranche of an RMBS of Belgian residential mortgages originated by its parent, Brussels-based Axa Bank Europe. Bankers at arranger BNP Paribas said that this provided the European retail banking arm of French insurance group Axa with a sensible way of issuing in the absence of Belgian covered bond legislation.

Skandinaviska Enskilda Banken will today (Wednesday) price a Eu1bn seven year issue at the tight end of revised guidance after meeting with strong demand for the first Swedish euro benchmark since June. Meanwhile, Italy’s UBI Banca is gauging interest for a new issue, Canadian Imperial Bank of Commerce has opened books for an Australian dollar debut, and a mandate for a debut off an innovative programme has been added to the deal pipeline.

Supply of sizeable euro covered bonds was this week at its lowest since the benchmark market reopened at the end of August, but activity is expected to pick up again next week, with issuers also said to be preparing for issuance in dollars and niche currencies. Meanwhile, Denmark’s Nykredit Realkredit today (Friday) launched an inaugural euro junior covered bond transaction.

Fitch has improved the Discontinuity Factor assigned to obligations foncières issued by Société Générale SCF because it is satisfied that the issuer could in its own name enter into repo transactions with the European Central Bank in the event of a default of its parent.

EuroWeek and The Cover, in association with Barclays Capital and Goldman Sachs, sought out the views of leading issuers, investors and Congressman Scott Garrett to discuss the US dollar covered bond market’s potential with respect to domestic and foreign issuers, as well as legislative and regulatory issues facing the asset class in the US.