Nordics

Landesbank Hessen-Thüringen Girozentrale (Helaba) issued a €1bn Pfandbrief on Wednesday at a final spread that was deeply through mid-swaps but got a strong response as it was able to offer a positive spread to Germany, where yields are negative. At the same time, Danske Bank issued this week’s only euro benchmark. As it was not eligible for the covered bond purchase programme it offered a quite attractive spread.

The Swedish regulator’s proposal to lower the covered bond swap counterparty rating threshold to single A from double A is credit positive, said Moody’s on Monday. Though at odds with overall European covered bond rules in the Capital Requirements Regulation and Directive, the proposal would allow banks to continue receive preferential regulatory treatment on their covered bond investments.

DNB Boligkreditt has stepped in to take advantage of demand in five year sterling floaters identified last week when JP Morgan issued a senior unsecured deal. On Monday, the Norwegian bank was set to become the first issuer this year to extend the sterling FRN covered bond curve to five years, with all other deals this year opting for three year tenor.

Nordea’s redemption of its only remaining hard bullet covered bond on January 30 was credit positive because it reduced the risk of a fire sale, Moody’s said on Monday. All the issuer’s outstanding deals are soft-bullet redemptions.

The International Monetary Fund’s recommendation that Danish banks reduce reliance on short-term funding and limit lending on variable rate, as well as interest-only mortgage loans, is credit positive for Denmark’s credit institutions, said Moody’s on Monday.

The covered bond market had a watershed moment on Friday when OP Mortgage Bank launched its 10 year. Despite an attractive spread, the deal was unable to get the sort of traction that the issuer may have hoped for. It was no coincidence that as books opened, ECB president, Mario Draghi, raised the prospect of full scale sovereign quantitative easing — something that is likely to make covered bonds look relatively expensive to government bonds.

The European Central Bank's covered bond purchase programme (CBPP3) turned relative value upside down this week, with a French deal pricing inside a similar Swedish offering, among a crop of four new issues.

Stadshypotek came to screens late on Monday morning to price the first Swedish covered bond after the opening of the European Central Bank’s third covered bond purchase programme. Although the central bank would not target Stadshypotek’s paper specifically as Sweden is not in the euro area, the programme has tightened spreads across the market.

For the first time the European Central Bank waded into the primary market to buy covered bonds for its third purchase programme (CBPP3) this week, as eurozone issuers from the currency bloc’s core and periphery returned after a long hiatus. The central bank’s buying may not be so good for core issuers but the evidence so far suggests peripheral names who have been locked out are about to bask in its largesse.

Swedish Export Credit Corporation could become the next agency to debut in the green bond market, with its underlying documentation nearly in place — but as the issuer is reluctant to raise more debt this year SRI investors might have to wait until 2015 before they can add the name to their portfolios.

Credito Emiliano became the second issuer to take advantage of the European Central Bank’s (ECB) buying programme, launching a covered bond on Thursday. The deal led to a repricing of the issuer's curve in a move that could spur other peripheral names to return to the market.

Nordea Finland has issued the first deal from a eurozone bank that is eligible for the European Central Bank’s covered bond purchase programme. Though it was priced at the tightest ever spread for a 10 year deal for a non-German issuer, investors said it offered good relative value.