Switzerland

With the euro pipeline looking light on clear candidates, the Australian market came to life on Tuesday. Commonwealth Bank of Australia’s A$3.5bn five year covered bond, the first from an Australian issuer, is the largest ever Australian dollar FIG transaction. Bank of New Zealand, however, found a very different reception for its euro offering and decided to postpone issuance.

ABN Amro and Credit Suisse maintained primary market momentum on Wednesday, adding another €2.25bn of supply. ABN Amro paid above initial price thoughts to ensure smooth execution of its 10 year, while Credit Suisse was able to price its five year inside UBS’s offering last week — making it the tightest five year euro print of the year.

Though the first day of activity in 2012 brought fewer trades than in 2011, the number of accounts that participated in the deals was up on last year. Almost 400 buyers participated in Tuesday’s salvo, with Germany taking over half of primary allocation.

UBS was the second of three banks to open books on a covered bond in 2012, bringing a five year euro benchmark on Tuesday. The granularity of the book had the issuer caught in two minds over what to do with the size of the deal, but it eventually chose to print €1.5bn.

DnB Nor proved jumbo transactions with minimal premia were possible on Tuesday, launching a well received five year trade expected to be €2bn in size. Credit Suisse meanwhile paid up handsomely for a seven year transaction not helped by the difficult tenor.

UBS was one of three issuers that came to market with a euro benchmark on Thursday, taking advantage of the first issuance window in roughly two months. The Swiss borrower secured a twice covered book for its three and a half year paper, including a significant proportion of new investors.

UBS and Eurohypo tapped the short end of the curve on Thursday, leaving long dated supply to UniCredit. Swedbank issued a five year dollar benchmark. Meanwhile the pipeline continues to build, with HSBC, Nordea Bank Finland, and Deutsche Pfandbriefbank announcing roadshows ahead of planned transactions.

A trio of Swiss franc deals has been the sum total of European primary market activity in the covered bond space so far this week. DnB NOR Bank, Vorarlberger Landes-und Hypothekenbank and Royal Bank of Canada brought issuance totalling Sfr375m (€328m). Vorarlberger Landes-und Hypothekenbank and DnB NOR Bank came to market on Wednesday, with deals of Sfr125m and Sfr175m respectively.

UBS made its first appearance in the covered market for over a year on Thursday. The Swiss borrower will price later today a three times oversubscribed Eu1bn five year deal, which a syndicate lead said had achieved the tightest pricing in that maturity outside of Pfandbriefe, since the collapse of Lehman Brothers.

Two European banks have issued benchmark dollar covered bonds this week, taking advantage of US investor interest in triple-A assets.

Société Générale convinced almost 150 accounts to participate in its debut euro Obligations de financement de l'habitat. The trade exceeded the already high expectations of syndicate officials following the first euro OH from BPCE.

Société Générale SFH has mandated BBVA, Crédit Agricole, Danske, ING, SG and UniCredit for its inaugural euro Obligations de financement de l’habitat, which will be launched in the near future.