Germany

France’s Caisse de Refinancement de l'Habitat has held back its possible deal after the market weakened and uncertainty continued over the trading suspension of CIF Euromortgage’s covered bonds. As parent company 3CIF’s silence over the suspension stretched into its third day, one banker told The Cover the lack of communications with investors was “a disaster”.

Berlin Hannoversche Hypothekenbank (Berlin Hyp) and Dexia Kommunalbank Deutschland (DKD) have bought back a combined total of over €3.5bn in public sector Pfandbriefe across 14 outstanding trades. As well as providing a precedent for other public sector lenders to follow, the buybacks should help tighten German Pfandbrief spreads in the secondary.

Despite the holiday shortened week, activity in the secondary covered bond market has been relatively good. Though not all houses attest to seeing flows, some banks have seen quite a lot. German and Scandinavian markets are very well supported, the UK has performed very well, France is mixed and Spain is offered.

Canadian issuers will no longer be able to use insured mortgages as collateral for covered bonds. Finance minister Jim Flaherty introduced a bill into the Canadian parliament on Thursday that will create a register for covered bond issuers. The bill will also prohibit the use of mortgages insured by private insurers or by the government backed Canadian Mortgage and Housing Corp (CMHC).

Dexia Kommunalbank Deutschland (DKD) on Monday announced it will buy back up to €3bn in public sector backed Pfandbriefe across 10 outstanding trades.

Berlin Hannoversche Hypothekenbank (Berlin Hyp) will issue a jumbo mortgage Pfandbrief in the summer, after a tender of four public sector backed trades that will help support an increase in the overcollateralisation of its mortgage cover pool, the issuer told The Cover.

Primary supply slowed on Thursday as poor peripheral data helped increase volatility, though the market has €3bn in successful benchmark supply to digest. Berlin Hannoversche Hypothekenbank Aktiengesellschaft (Berlin Hyp) announced a tender of four public sector backed Pfandbrief trades, following a well received public sector backed deal from UniCredit Bank Austria.

Landesbank Hessen-Thüringen (Helaba) sold Germany’s first jumbo covered bond in almost a year, and the first public sector backed benchmark of 2012. It also enjoyed the largest foreign participation in any German deal this year, and told The Cover it could return with a second trade if conditions are favourable.

Germany’s Helaba broke ranks with cautious covered bond issuers on Tuesday to launch the first euro benchmark trade for two weeks. The rare borrower found strong demand for a €1bn public sector backed transaction, and another deal out of core Europe is expected on Wednesday, said syndicate bankers.

Hopes for imminent covered bond issuance dimmed on Monday as the asked for stability proved elusive. With government spreads still widening and background volatility persistent, even top issuers will have to offer positive new issue premiums to compensate buyers, said syndicate officials.

The European covered bond market is stabilising on Friday, with buyers reported in French and Scandinavian names. But the Spanish market remains shaky, and though selective bids returned the macro sovereign backdrop deteriorated after Thursday's brief impovement.

Covered bond supply should restart next week given a stable opening, said syndicate officials on Friday, and several issuers are looking to launch trades. But with upcoming elections in France and the market still full of uncertainty after the renewed volatility of early this week, headline risk could keep second quarter supply muted.