Ireland

Depfa Deutsche Pfandbriefbank priced its second benchmark of the year at the tight end of guidance yesterday (Tuesday) afternoon, taking advantage of thorough groundwork to turn around its Eu2bn as quickly as possible. Depfa’s attentions will turn to potential public ACS issuance in the second half.

Banco BPI opened books on its first covered bond this (Monday) morning, surprising many market participants who had expected the weak tone in the credit markets and summer holidays to dampen issuance. However, even more supply could emerge, with a public sector Pfandbrief being soft-sounded.

Bank of Ireland Mortgage Bank this week issued what is believed to be the largest Irish mortgage ACS to be sold to end investors this year, a Eu500m deal. The Cover understands that the Irish issuer has also hired a new head of long term funding from Depfa.

The performance of Ireland's mortgage asset covered securities during the past few months backs up the view of OSFI Canada’s Gilbert Ménard that legislation is not enough to guarantee that a jurisdiction trades at the tight end of the covered bond market, even if it initially appeared to be.

The covered bond market endured a rocky morning today, with spreads widening alongside heavy falls in equities, giving the European Covered Bond Council further food for thought ahead of its meetings in Milan later this week. But Germany could once again prove the exception in the primary market.

Depfa Deutsche Pfandbriefbank has opened books on a five year benchmark sized Pfandbrief, with the public sector lender finding conditions more appropriate for issuance through its German arm than its Irish ACS unit.

HSH Nordbank has completed the European roadshow for the first euro benchmark ship Pfandbrief and, surprisingly, eschewed vague remarks on a launch date and instead attempted to book a slot in what is expected to be either a busy or a very difficult January for issuance. Meanwhile AIB Mortgage Bank raised Eu175m through a tap of its 2017 issue.

The wisdom of AIB Mortgage Bank’s decision to try to issue a three year covered bond via Barclays Capital, BNP Paribas and Deutsche Bank this week was being questioned today after the bank’s decision to pull its issue yesterday (Tuesday). While market participants understood the decision to suspend its issue in light of the deterioration in market conditions, they asked why AIB tried to come to such an oversupplied and fragile market with a deal that has now only further undermined sentiment.

AIB Mortgage Bank has taken the unprecedented step of postponing its planned three year covered bond more than a day after opening books for the issue, citing the “extreme volatility in the credit markets”. The decision threatens to further damage sentiment in the covered bond market, which one syndicate manager described as “poisoned”.

AIB Mortgage Bank was said to be struggling to build a book for its three year mortgage backed jumbo covered bond this (Monday) morning at guidance of 10bp over mid-swaps as the heavy pipeline appeared to have finally broken the primary market’s back, with covered bond investors finding plenty of reasons not to buy. Abbey is said to have postponed its planned issue in light of the torrid conditions.

Depfa is setting up a 144A US MTN programme and is on the road in the States. Until now Depfa has issued its 144A benchmark deals on a standalone basis.

Fitch Ratings delivered an optimistic assessment of the performance of the leading Portugese banks in the first half of 2007. The report, published on Friday, expects the banks to maintain this strong performance despite recent difficult market conditions.