The Netherlands

Conditional pass-through bonds gained buyside support on Wednesday when a leading covered bond investor said they could help small, rating-constrained banks from Europe’s periphery. Henrik Stille of Nordea Investment Management was speaking at a panel at the ECBC plenary session in Barcelona. Vulnerable issuers could use the conditional pass-through structure to shore up covered bond programme ratings as the rating agencies are not going to move quickly on positive developments for covered bonds in the Bank Recovery and Resolution Directive.

The conditional pass-through covered bond structure will be the key focus of debate at Wednesday’s plenary session of the European Covered Bond Council’s plenary session, at the Caixa Forum in Barcelona. Investors are likely to baulk at the structure’s inherent extension risk, but the sell side will counter that traditional bullet structures could become pass-through as documentation is not specific and they have never been properly tested.

NIBC’s pass-through covered bond, which has been successfully registered with the Dutch central bank and will be compliant with CRD and Ucits, should attract investors, according to ABN Amro research. But they could have to wait an extra four years to be repaid if the pass through is triggered, a level of uncertainty that should be manageable said the analysts.

Standard & Poor’s and Fitch have both assigned top ratings to NIBC’s conditional pass-through covered bond. The issuer has privately placed a small amount of bonds and is expect to publicly distribute them, according to S&P.

ABN Amro returned to the covered bond market on Thursday with its first deal of 2013, a €1.5bn 10 year. After being out of the market for just over a year, the borrower attracted a comfortably oversubscribed order book in a very short time span, underscoring a much greater depth to the market than ANZ’s recent funding appeared to suggest.

Bankers have played down fresh reports of Dutch government plans to set up a mortgage financing agency to fund low risk mortgages. The topic has been under discussion for some time and the final outcome remains uncertain, bankers told The Cover on Thursday.

The Dutch arm of BNP Paribas Personal Finance will begin a roadshow next week for its second ever publicly sold RMBS.

Santander UK has announced a new deal from its Holmes master issuer RMBS shelf. The prospective deal is likely to offer a significant spread pick up compared to UK covered bonds. And Rabobank has privately placed RMBS issuance from its Obvion subsidiary.

ING priced its tightest ever covered bond this week —inside the French sovereign curve. It demonstrated deep demand at the long end despite low yields, said bankers.

ING Bank offered buyers a rare bite of Dutch covered bond supply on Wednesday and launched the country’s first euro benchmark in nine months.

Dutch bankers have hit back at suggestions that the local regulator’s increased focus on encumbrance is behind a fall in covered bond issuance. The obsession with covered bond encumbrance does not give a true picture, they told The Cover this week.

High redemptions, combined with deleveraging and a drive towards deposit funding has put net first quarter covered bond supply in 2013 on track to hit record lows, said Barclays analysts on Thursday.