Germany

Deutsche Hypothekenbank Hannover and Aareal Bank launched five year mortgage Pfandbriefe on Tuesday. Both deals were capped at €500m and both were priced at the tight end of revised guidance, as the wealth of domestic demand showed no signs of weakening.

DNB Boligkreditt got the covered bond market off to a flying start on Monday with a €1.5bn seven year benchmark deal. Norwegian peer Terra Boligkreditt has readied its own euro trade and could launch on Tuesday, while two German issuers have mandated for five year mortgage Pfandbriefe.

The recent run of Pfandbriefe looks set to continue, with at least two more German credits closely monitoring the market. Meanwhile, a rally in OATs combined with an enduring domestic bid mean the first French covered in two months could be only days away, said syndicate bankers.

Volatile markets have clearly helped drive the bid for all German assets — as was most conspicuous when Münchener Hypothekenbank issued its 10 year Pfandbrief this week.

Deutsche Bank delivered the week’s third German Pfandbrief benchmark on Thursday, matching Münchener Hypothekenbank’s record low coupon for a 10 year trade a day earlier. Together with HSH Nordbank’s trade on Wednesday, German credits have sold six euro deals in a row, and the pipeline of potential Pfandbrief is not yet exhausted, said syndicate bankers.

A phenomenal reception for three Pfandbrief benchmarks this week has raised hopes that fresh German trades will maintain primary momentum next week. Meanwhile, French sovereign and agency paper has tightened strongly in secondary.

Pfanbrief starved German accounts and international buyers fleeing to quality fell upon dual €500m no grow deals from Landesbank Baden-Württemberg (LBBW) and Deutsche Pfandbriefbank (pbb) on Thursday. A collective €3.4bn in orders across the two trades allowed negative and non-existent premiums respectively, with LBBW’s deal boasting the tightest spread for a euro covered bond benchmark in over a year.

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.