Germany

Rabobank's Obvion managed to almost double the size of its Storm 2012-1 RMBS, while tightening pricing on the short tranche by 10bp. The success of the trade surpassed expectations of market participants. Though covered bonds would be cheaper, the RMBS financing is isolated enough to protect the bank's top senior rating.

Barclays Capital’s new fiscal strength covered bond indices, which adjust the market value weighted exposure of country risk based on fiscal strength, have won the support of investors polled by The Cover.

Covered bond supply was restricted to an impressive €850m tap from BPCE on Thursday, taking the number of long dated French transactions already this year to six.

A series of mandates from outside the eurozone hit screens on Friday. Australian, New Zealand and Norwegian issuers could all launch in the next two weeks, while three Turkish banks have hired UniCredit Menkul Degerler for trades in 2012.

As a result of deal announcements and the new issue premium, secondary market turnover has been hit, with spreads moving on little volume. Curves have conspicuously steepened in France but DexMA remains out of line.

Four covered bond issuers collectively raised over €5bn of new funding on Tuesday across two currencies and three tenors. Total issuance this week exceeds €8bn equivalent and on Wednesday a further two are lining up with euro benchmarks. This suggests borrowers will have raised at least €25bn equivalent this year by the close of play on Wednesday.

The covered bond primary market continues to enjoy good momentum, with as many as four issuers collectively raising the equivalent of around €5bn in the four to 12 year area across two currencies.

Australia and New Zealand Banking Group, Aareal bank and Compagnie de Financement Foncier successfully raised a collective €2.5bn on Monday, opening the way for Deutsche Pfandbriefbank, Nordea and Credit Mutuel-CIC - which are expected to launch and price deals on Tuesday.

Germany’s Aareal Bank launched the first Pfandbrief of 2012 on Monday, targeting a no-grow €500m four year transaction. With the deal size fixed, the issuer prioritised pricing, managing to defy bankers’ expectations and price inside guidance of 60bp area — and inside the curves of other second tier German issuers.

DNB Nor and Lloyds came to market on Wednesday with five year offerings that enjoyed a healthy oversubscription. German investors and bank treasuries drove the trades for the non-eurozone credits, enabling both to price at the tight end of guidance. But in terms of spread, the difference of nearly 120bp showed that the similarities ended there.

Société Générale launched the third French benchmark in as many days on Thursday. The French trio’s reception has been highly positive, with German investors driving the order books.

Though the first day of activity in 2012 brought fewer trades than in 2011, the number of accounts that participated in the deals was up on last year. Almost 400 buyers participated in Tuesday’s salvo, with Germany taking over half of primary allocation.