Switzerland

The recent French issuer flood into the buoyant Swiss franc covered bond sector accelerated further this week as Caisse de Refinancement de l’Habitat launched the market’s biggest deal in over a year — a more than doubled Sfr625m two tranche issue. Together, Monday’s Sfr350m 10 year tranche and Sfr275m five year rank as Switzerland’s largest covered bond since Canadian Imperial Bank of Commerce’s Sfr675m trade in 2009.

Choppy market conditions limited Tuesday’s seven year covered bond for ABN Amro to the launch size of Sfr150m. This is the borrower’s second deal of the year after last week’s Sfr150m five year senior unsecured trade. Credit Suisse and BNP Paribas were the lead managers.

Crédit Agricole has issued a Sfr275m three year Swiss franc covered bond, tapping institutional demand for shortening durations. While extended durations were the order of the day at the end of 2010, some asset managers are expecting a rise in interest rates this year and they are scrambling to shorten the duration of their portfolios.

The covered bond market has experienced its busiest ever week with as many as 15 deals pricing, giving a grand total of about Eu19bn over the holiday shortened week.

Credit Suisse raised Eu1.25bn on Wednesday through its first benchmark covered bond. An official at the issuer told The Cover that the funding instrument proved its worth by attracting investors new to Credit Suisse and facilitating market access despite challenging conditions.

Credit Suisse is today (Wednesday) making its debut as a standalone covered bond issuer and has attracted strong demand for a Eu1.25bn five year deal despite tight pricing and a challenging market backdrop. Germany’s DVB Bank is in the market with an inaugural ship Pfandbrief.

The covered bond market could still be open for deals from high quality issuers and solid jurisdictions, according to syndicate bankers, despite wider market conditions quickly deteriorating yesterday (Monday) over fears that political turmoil in Ireland could derail implementation of a European Union and International Monetary Fund bailout package.

The pace of benchmark covered bond supply could step up a gear this week, with Credit Suisse eyeing the middle of the week for the launch of its inaugural issue, a Dutch bank said to be close to coming to market and others deciding on next steps after having finished roadshows last week. But another issuer has put primary market plans on hold until next year.

While not immune from nervousness triggered by uncertainty about the prospects and structure of a bailout package for Ireland the covered bond market this week held up relatively well, according to syndicate bankers, who attributed thinner liquidity to the approaching end of the year. A large US dollar private placement yesterday (Thursday) wrapped up sizeable new issuance in covered bonds this week.

Bank of New Zealand is said to have met with investors in connection with a possible euro issue, thereby adding to a list of issuers that are roadshowing new programmes and/or preparing inaugural euro market issuance. The stage is set for a record number of debuts in any one month, but a bout of turmoil in the eurozone sovereign debt markets this week means that borrowers and investors will be taking a cautious approach to new business.

Credit Suisse is close to launching the first issue off a new covered bond programme, which would make it the second Swiss bank to issue a standalone covered bond and the second outside the country’s Pfandbrief Act.

UBS yesterday (Wednesday) priced a Eu1.25bn 12 year issue, the biggest deal in the maturity this year. A reverse enquiry from a German insurance company was the initial spark for the transaction, according to a syndicate official at one of the leads.