The Netherlands

ING on Wednesday confounded predictions that a German or Nordic name would end almost two months of inactivity in the covered bond market. The borrower launched a bold €1.75bn 10 year transaction, which offered investors a generous 15bp concession over its outstanding curve, providing the market with an indicator of the higher premiums now needed to print deals.

ING reopened the covered bond market on Wednesday, launching the first euro benchmark in almost two months. Syndicate officials had been waiting for a top tier name from core Europe to end the August lull after a series of successful SSA trades. Several were still surprised, however, that with indices widening and volatility ever present, a borrower stepped forward to pull the trigger on a 10 year trade.

French covered bonds have widened in the secondary market following concern that the sovereign could lose its triple-A rating. Meanwhile traders reported buying in Spanish and Italian covered bonds as investors move out of government paper.

Canadian Imperial Bank of Commerce found a window for issuance amid market volatility on Thursday, launching its third Australian dollar deal of the year. In a difficult week for all asset classes, market participants said the A$600m three and a half year benchmark showed covered bonds are living up to their billing as a genuinely global product.

Covered bond bankers expect the Greek parliament to approve austerity measures in today’s vote, but even if that happens, they do not expect much of a relief rally. If the measures are not approved then it’s likely that the consequences will be catastrophic.

Deutsche Bank and Natixis have been mandated for Achmea Hypotheekbank’s new Dutch RMBS, Dutch Mortgage Portfolio Loans IX (DMPL IX), while BNP Paribas’s Phedina has priced.

BNP Paribas’s Dutch RMBS, Phedina 2011-1, was fully covered at Friday’s guidance of 90bp-95bp for the two year ‘A1’ tranche and 130bp-135bp for the five year ‘A2’ tranche, with more orders coming in on Monday morning.

Demand from insurance companies and pension funds for covered bonds has increased this year, according to Barclays research, while interest from central banks and asset managers has fallen. Germany and Austria are the only regions where overall investor interest for covered bonds has decreased noticeably, though in some jurisdictions investors have participated far less in issuance from certain countries.

Moody’s cut covered bonds issued by Dutch issuer NIBC Bank from Aa2 to A1, following a downgrade of the issuer’s senior unsecured rating on June 3.

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.