France

Three issuers announced mandates this (Monday) morning, ensuring that the pipeline remains bulging even after three issuers closed books on new issues, as the pace of supply showed no sign of relenting in the second week of the new year.

Standard & Poor’s has taken the first actions under its new covered bond rating methodology, affirming six programmes’ AAA ratings.

Next week promises to be as busy as this week’s record opening to a year, with two more issuers having officially announced plans for benchmarks in the past 24 hours on top of three outstanding mandates. Supply of Eu5.5bn yesterday (Thursday) took the week’s total to Eu10.25bn from seven deals, just short of the eight totalling Eu11bn in the busiest ever week for the covered bond market at the end of September.

With four new jumbos hitting the market this (Thursday) morning, the number of benchmark issues this week is second only to the last week of September. However, investors have expressed disappointment about what they called expensive spread levels.

A Eu1.5bn seven year covered bond for BNP Paribas off its Home Loan programme yesterday (Tuesday) met with a strong reception from investors who, according to a BNP Paribas official, demonstrated an encouraging degree of conviction in the new issues that reopened the primary market.

Bankers said that Banco Bilbao Vizcaya Argentaria turned over a new leaf with the first Spanish covered bond of the year today (Tuesday), a benchmark transaction that – like deals for BNP Paribas and Dexia Kommunalbank Deutschland – is set to be priced at the tight end of guidance on the back of an oversubscribed order book. The trio of deals mark the reopening of the jumbo market in 2010.

Issuers are limbering up to launch the first benchmark covered bonds of 2010, with three institutions having mandated for transactions that could hit the market this week and others busy with preparations.

Moody’s is investigating whether a draft law being discussed by France’s parliament that provides for a 50% withholding tax on certain interest payments could adversely affect some covered bond programmes, the rating agency said yesterday (Thursday).

Christine Lagarde, French minister for the economy, industry and employment, today (Wednesday) presented a draft law to the council of ministers that would accommodate French covered bonds issued outside the country’s obligations foncières framework.

Caisse de Refinancement de l’Habitat today (Thursday) increased an April 2019 benchmark covered bond by Eu105m through Landesbank Baden-Württemberg, taking advantage of good investor interest for 10 year paper.

CIF Euromortgage yesterday (Thursday) priced a Eu1.25bn April 2012 obligations foncières issue at 10bp over mid-swaps, matching Compagnie de Financement Foncier in achieving the tightest level for a benchmark covered bond this year. Meanwhile, Caja Murcia’s issuance plans are understood to be on hold.

CIF Euromortgage is set to price an April 2012 benchmark at the tight end of guidance this (Thursday) afternoon after having built a book of around Eu1.5bn for the new issue.