Germany

Restructuring costs led Deutsche Bank to a net loss of €832m in the third quarter of the year, leading investors to doubt the potential for reliable performance in the issuer’s fixed income securities.

Deutsche Bank plans to sell a structured conditional pass-through (CPT) covered bond that is packed with commercial mortgages and has a double-A rating. The collateral-efficient funding makes perfect sense for the issuer and, in a negative yield environment, it could also potentially be interesting for certain investors.

UniCredit’s search for a more efficient corporate structure shows how an incomplete Banking Union is beginning to weigh on pan-European financial institutions.

Independent external auditors are looking into whether the European Commission has been successful in its work towards creating a capital markets union over the last five years. They are set to publish a report containing their recommendations for the project in 2020.

KfW was the only public sector borrower in the primary market on Monday, raising $1bn with a March 2021 intra-day trade which was priced with the same coupon as the World Bank’s 10 year dollar deal earlier this month.

Sumitomo Mitsui Banking Corporation (SMBC) is expected to open order books on Tuesday for a dollar and euro covered bond. Deutsche Kreditbank will follow with its social Pfandbrief on Wednesday. Credit Mutuel Arkea will see investors with plans to issue its first public sector covered bond.

LBBW had enough support from investors to price a new additional tier one (AT1) with hardly any new issue premium on Monday, having been pushed into entering the asset class for the first time as a result of recent changes to the rules on bank capital in Europe.

Berlin Hyp on Monday launched its first preferred senior bond in green format. The German issuer chose a 10 year maturity and quickly attracted orders, supported by an investor community that follows the bank’s frequent green issuance.

Berlin Hyp announced on Friday that it intended to sell a preferred senior bond in green format. It is the second German bank this week to disclose intentions to market a bond, following LBBW.

Instituto de Crédito Oficial (Ico) and Investitionsbank Berlin (IBB) found strong demand in the short end of the euro curve on Wednesday, which SSA bankers are calling the new sweet spot, despite the deeply negative yields.

Negative rates are expected to persist in covered bonds, forcing investors to widen their search for value. And with spreads likely to tighten as the European Central Bank ramps up buying from November, some are looking to local currency Nordic markets.

Deutsche Kreditbank (DKB) has mandated leads for a roadshow ahead of a planned €500m Blue Social Pfandbrief that will finance public water and waste management facilities, to be issued under the bank’s existing social bond framework.