The Netherlands

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.

ABN Amro sold a Eu1.25bn seven year transaction yesterday (Wednesday), which leads ABN, BNP Paribas, Crédit Agricole and DZ Bank priced at 70bp over mid-swaps.

Primary issuance continues to power ahead with five deals pricing yesterday and a further five deals expected to price this afternoon. Several more have been announced but, in a possible sign of things to come, two have been postponed and there is speculation that another is struggling.

ING sold a Eu1.25bn seven year transaction yesterday (Tuesday), which priced at 60bp over mid-swaps, in line with guidance, via leads Barclays, ING, Natixis and UniCredit.

After a very quiet December, market participants are not surprised to see a strong start to the primary market in the New Year, with one deal already priced and as many as seven others on the way.

Following a premature halt to new issuance this year, syndicate bankers expect the onset of 2011 to bring a rush of benchmark covered bond supply as issuers hasten to execute funding plans in anticipation of continued market volatility. A liquid buy-side should ensure that deals are readily absorbed - at least initially.

Rough market conditions and dwindling liquidity mean that few to no deals could be launched next week although some issuers are still monitoring the market, according to syndicate bankers.

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.

The European Central Bank has introduced a rule exempting non-Ucits covered bonds from provisions prohibiting a counterparty from submitting as collateral an asset that is issued or guaranteed by itself or by any other entity with which it has close links.

Lloyds TSB Bank is understood to have attracted more than Eu3bn of demand for a 10 year covered bond this (Wednesday) morning, demonstrating strong support for the long end and UK names. The issue comes after SNS Bank sold a Eu1bn 10 year yesterday (Tuesday), with the issuer citing yield levels as a key factor in its execution.