France

The hectic pace of issuance in the covered bond market was maintained today (Tuesday), with three new deals following four yesterday, but issuers had to make do with smaller sizes and wider spreads.

The covered bond market had one of its busiest ever sessions this (Monday) morning, with four institutions making the most of an issuance window despite overall sentiment remaining fragile.

The primary covered bond market is expected to be very busy next week, with mandates for Münchener Hypothekenbank and OP Mortgage Bank announced this (Friday) morning said to be only the first of many due to emerge in the coming days. Meanwhile, France’s CM-CIC snuck out a deal today between a German public holiday yesterday and US non-farm payrolls today.

BNP Paribas priced the biggest benchmark covered bond since the middle of April yesterday (Wednesday) to wrap up the busiest day in the market since then, with Sparebanken Vest and Dexia Kommunalbank Deutschland also taking half a yard each out of the market.

Standard & Poor’s has affirmed at AAA the public sector-backed covered bonds issued by Dexia LdG Banque and Eurohypo Luxembourg, but assigned a negative outlook to the latter’s because their rating would automatically be cut in the event of an issuer downgrade.

Crédit Mutuel Arkéa yesterday (Tuesday) achieved a targeted size of Eu1bn for its inaugural public covered bond despite facing deteriorating market conditions during the deal’s execution.

Three issuers launched euro covered bonds this (Wednesday) morning ahead of a public holiday in many parts of Germany tomorrow, with market conditions said to be better than yesterday, although still weak. Meanwhile, the US market could see its first new covered bond supply since mid-April.

France’s Credit Mutuel Arkéa this (Tuesday) morning launched an inaugural public covered bond, marketing a Eu500m minimum issue at a spread wider than some had anticipated in a difficult market.

GCE Covered Bonds will price the first covered bond of Eu1bn or more in five weeks this (Thursday) afternoon, a four year issue at 40bp over mid-swaps that one banker described as “a first glimmer of hope”.

Austria’s Bawag PSK and France’s Crédit Mutuel Arkéa finish covered bond roadshows today (Friday), and will early next week assess investors’ feedback to see if new issues makes sense.

Hopes that benchmark covered bond issuance could restart next week have been reined in after reports that French president Nicolas Sarkozy threatened to pull out of the euro-zone contributed to renewed volatility today (Friday).

France’s Crédit Mutuel Arkéa yesterday (Monday) started a two week roadshow for a Eu10bn covered bond programme. Meanwhile, a European Central Bank governing council member said that there have been “no changes” to the covered bond purchase programme.