The Netherlands

Martin Nijboer, head of securitizations at ING Bank, has explained why his bank has set up a new soft bullet covered bond programme, which received approval this week from the Dutch Authority for the Financial Markets (AFM).

Two of the strongest RMBS platforms in the European securitization market hit the market this week, and showed investors are still eager to grab the highest quality paper.

Veneto Banca and Rabobank have mandated leads for RMBS. The deals offer a generous pick up to what investors could expect in covered bonds given their comparably low risk.

NIBC Bank returned to the covered bond market on Tuesday to launch its second conditional pass-through covered bond (CPTCB). The unreconciled book suggested that the issuer attracted greater scale of demand from a wider group of buyers compared to its first deal. The growing acceptance of this innovative product at a much tighter spread bodes well for future use of this structure.

The Dutch covered bond market could be poised to expand, after the Finance Ministry published draft proposals that would allow lower-rated borrowers to issue bonds and set up programmes backed by small to medium sized enterprises. The news comes as NIBC prepares for the return of its conditional pass-through structure and amid talk that other Dutch RMBS issuers are now considering setting up such programmes.

DBRS published a comment on Thursday comparing conditional pass-through covered bonds with securitizations. Investors in conditional pass-through structures must monitor the underlying assets, cash flows and extension risk more carefully than those investing in bullet maturity structures. Investors must therefore be more skilled in credit analysis.

NIBC Bank is planning to launch a second deal off its conditional pass through programme (CPTP) after mandating leads for a roadshow. The issuer’s outstanding deal has performed, but only after a fairly long period of time had elapsed, said bankers.

Rating: Aaa/AA+/-

ABN Amro returned to the covered bond market on Thursday, issuing a €1.5bn 10 year deal with an attractive new issue premium. However, with the long end now saturated with supply and the secondary market still looking soft, questions continue to linger.

Despite some investors snubbing NIBC’s popular new conditional pass-through covered bond (CPTCB) structure when it was priced on Tuesday, analysts say there are a number of reasons why the structure should be on RMBS and covered bond investor buy lists alike.

The strong reception NIBC encountered for its conditional pass-through covered bond from traditional covered bond investors pays testimony to its regulatory endorsement from the Dutch central bank. This approval gave the product a much wider appeal than was initially expected, suggesting there is scope for a broader range of issuers to consider this structure than was first thought.

NIBC has priced the first conditional pass through covered bond in line with guidance building a comfortably oversubscribed book. But whether other issuers will attempt similar deals remains to be seen.