Germany

The hectic pace of issuance in the covered bond market was maintained today (Tuesday), with three new deals following four yesterday, but issuers had to make do with smaller sizes and wider spreads.

Münchener Hypothekenbank achieved easily the tightest spread of four issues yesterday (Monday), selling a Eu1.25bn five year mortgage Pfandbrief at 8bp over mid-swaps, following guidance of the 9bp area.

The covered bond market had one of its busiest ever sessions this (Monday) morning, with four institutions making the most of an issuance window despite overall sentiment remaining fragile.

The primary covered bond market is expected to be very busy next week, with mandates for Münchener Hypothekenbank and OP Mortgage Bank announced this (Friday) morning said to be only the first of many due to emerge in the coming days. Meanwhile, France’s CM-CIC snuck out a deal today between a German public holiday yesterday and US non-farm payrolls today.

BNP Paribas priced the biggest benchmark covered bond since the middle of April yesterday (Wednesday) to wrap up the busiest day in the market since then, with Sparebanken Vest and Dexia Kommunalbank Deutschland also taking half a yard each out of the market.

Standard & Poor’s has affirmed at AAA the public sector-backed covered bonds issued by Dexia LdG Banque and Eurohypo Luxembourg, but assigned a negative outlook to the latter’s because their rating would automatically be cut in the event of an issuer downgrade.

Following the departure of Florian Eichert for Credit Suisse, Landesbank Baden-Württemberg has detailed how its credit research team will be handling covered bonds.

Three issuers launched euro covered bonds this (Wednesday) morning ahead of a public holiday in many parts of Germany tomorrow, with market conditions said to be better than yesterday, although still weak. Meanwhile, the US market could see its first new covered bond supply since mid-April.

Westdeutsche ImmobilienBank’s mortgage Pfandbriefe were yesterday (Wednesday) affirmed and removed from CreditWatch negative by Standard & Poor’s, but are on negative outlook.

UniCredit Bank launched a new, Eu500m Pfandbrief issue this (Thursday) morning, despite markets being preoccupied with understanding the implications of a ban on uncovered short-selling of euro-zone government bonds and on naked CDS imposed on German banks by BaFin. But covered bond issuers outside Germany remain put out by the unilateral German initiative.

Germany’s Federal Financing Supervisory Authority (BaFin) banned uncovered short-selling of euro-zone government bonds and their CDS by German banks as of midnight last night, raising fears that liquidity in covered bonds would be hit and a reopening of the benchmark market delayed.

Barclays Bank plans to issue registered covered bonds off its Eu35bn global covered bond programme, the UK bank announced today (Tuesday).