The Netherlands

After the activity and drama of the first part of the week, Ascension Day holidays across most of Europe have lent a quiet tone to the market and a more sedate close is anticipated. But with as many as five deals mandated and a few others rumoured, the pace is likely to pick up next week.

Ratings agencies and covered bond analysts have still not reached a consensus over the most efficient way to mitigate against refinancing risk following a segregation event.

Monday was another quiet day for the covered bond market, though syndicate officials remained confident mandates would come. Market participants stressed that covered bonds were not the only asset class where supply was scarce, and were hopeful that as issuers leave blackout and investors become increasingly cash rich, issuance was only a matter of time.

Secondary trading has paused for breath lately, but there are still good pockets of liquidity and interest – specifically for French, UK and to a lesser extent Dutch and Scandinavian deals. The primary market could be due another slow week though a French deal is highly likely, with Société Générale tipped as a probable candidate. UK issuers are looking at the dollar market but there is speculation that one is looking at sterling.

Secondary trading has picked up pace in light of limited primary issuance. An attractive rates environment has ensured continued demand for long dated French paper, while selling has increased in peripheral covered bonds now flat to the government curve.

Taking advantage of scare supply at the long end and a rising yield environment, ABN Amro raised Eu2bn of 10-year funding on Tuesday morning. The transaction was priced well inside guidance on a comfortably oversubscribed book, in which there was little price sensitivity.

Deutsche Hypothekenbank Hannover is set to price a public sector backed Pfandbrief this afternoon, following NIBC’s first public deal which was priced at the end of last week. The book build on both northern European deals has been seamless, despite further volatility and credit rating concerns around peripheral Europe.

The Netherlands NIBC Bank brought primary market activity to a close this week, launching an inaugural Eu500m three-year deal on Friday via leads LBBW, Natixis, and RBS, which priced the new issue at 105bp over mid swaps.

Though primary market activity remains muted, the pipeline continues to grow despite headline risk. A string of mandates for US dollar deals are expected, along with a sterling transaction from Barclays.

The books on ING Bank’s five year covered bond closed at 11:45am UK time. Being the only deal in the market gave it exclusive status and it drew Eu2.25bn of orders from over 100 accounts.

Guidance on ABN Amro’s Dolphin 2011-1 Dutch RMBS is 135bp-140bp over three month Euribor for the five year senior notes — 10bp inside the guidance on the last Dutch RMBS, Delta Lloyd’s Arena 2011, and inside secondary market bid prices. ABN Amro, JP Morgan, Rabobank and Royal Bank of Scotland are the lead managers.

Delta Lloyd’s Arena 2011-1, the first European ABS deal of the year, priced at the tight end of guidance on Friday, signalling that the market is ready for more Dutch prime.