North America

Secondary market selling of covered bonds slowed a little on Friday ahead of the US payrolls report. But bankers say the US data won’t make much of a difference as further selling is likely. In the primary market there is concern that if a deal is incorrectly priced, it will add to problems and potentially close the funding window for other issuers

Scotiabank filed for SEC registration this week, increasing the likelihood of other issuers filing programmes with the SEC, a US lawyer told The Cover on Thursday.

Santander Chile is set to issue Chile’s first domestic covered bond this month. It will be triple-A rated and have a 15 year maturity. Meanwhile in Canada, Bank of Nova Scotia is lining up an SEC registered deal, the first off the country’s new legal framework.

The covered bond market is open for almost any issuer and though its unlikely that activity will pick up quickly, there are a number of potential transactions expected in the coming weeks, bankers told The Cover on Monday.

Sweden’s Stadshypotek took the year’s total for dollar covered bond issuance past $10bn this week with a $1.25bn five year deal. Nordic issuers’ spreads are closing in on those of their Canadian peers and dollar covered bonds from many countries have become expensive compared to Treasuries, said Barclays analysts.

UBS and Swedbank closed dollar benchmarks this week, pricing their deals well inside where they could have funded in euros. Demand in the dollar market far outstrips supply, and the eager investor base should help draw more borrowers looking to take advantage of the arbitrage.

DNB Boligkreditt began marketing a five year dollar covered bond on Thursday, its first benchmark in the currency in two years.

Under a new model, that will be used to analyse Canadian covered bonds, Fitch said on Tuesday that Canadian house prices were overvalued by a real 20%, which is more than bankers had previously said.

Korea Housing Finance Corp opened books on its latest benchmark covered bond on Tuesday. It is only the second dollar deal of the year, and this lack of issuance, together with a triple-digit starting spread should mean a successful outcome, said bankers.

Commonwealth Bank of Australia is ready to launch the first Australian covered bond of the year, after mandating banks for a benchmark US dollar deal that an official close to the deal told The Cover was likely to come on Wednesday. The Australian covered market is set to be the fastest growing this year, with Fitch predicting up to $37bn of supply.

Canada Mortgage Housing Corp’s (CMHC) new covered bond guidelines have a host of investor friendly attributes but will also raise credit and market risk in borrower programmes, according to Moody’s.

Canada Mortgage Housing Corp (CMHC) has published the final details of Canada’s covered bond framework, allowing issuers to begin building new programmes for a return to market in 2013. Though uninsured mortgages are prohibited, in-depth disclosure requirements should go down well with investors and stand borrowers looking at SEC and 3(a)(2) issuance in good stead.