UK

Finance for social investments could take a step forward following the publication of free template documents to create an association and raise debt finance.

Afren, the Africa-focused oil exploration company listed on the London Stock Exchange, has avoided default on a $300m loan after obtaining a deferral from banks on the $50m amortisation payment that was due on Saturday January 31 for its Ebok debt facility.

Leeds Building Society has priced a £300m three year floating rate covered bond on Monday, as Belfius Bank and BPCE mandated leads respectively for 10 and seven year deals. The primary activity comes as Nordic issuers emerge from blackout, and amid talk that a Swedish 10 year deal could soon surface.

Restaurant chain operator Wagamama will cancel its banking debt with the £150m senior secured bond it sold on Wednesday, a debut issue for the company.

Covered bond issuers from outside the Eurozone launched deals this week denominated in sterling and Australian dollars. But a bigger proportion were from the Eurozone where borrowers launched deals in the single currency in maturities that ranged from four to 20 years. The transaction were priced generously and enjoyed a solid reception, with central banks taking a back seat.

Lloyds has become the fourth issuer this year to fund in sterling covered bonds, a market that has so far provided €3.65bn equivalent, almost as much as has been issued in euro benchmark format this year.

The primary covered bond market was re-opened by Barclays Bank, which issued a £1bn three year sterling deal on Monday. Order book momentum was slow to build reflecting an underlying uncertainty about the near term spread outlook and the size of new issue premiums that will be required next week when the more important euro market is expected to open.

The Bank of England’s stress tests of its eight major banks and building societies has not spooked covered bond investors, despite the near failures of Royal Bank of Scotland and Lloyds.

Daniel Loughney, covered bond portfolio manager at Alliance Bernstein in London, speaks to The Cover about the outlook for covered bonds.

Coventry Building Society returned to the covered bond market for the first time in three years to take advantage of better market conditions than those that prevailed mid-week, and execute a trade before Sunday’s Asset Quality Review and stress test results are out, which could potentially disrupt the broader FIG market. Though there was some sensitivity in the book, the small deal size meant it was able price 2bp inside the tight end of initial guidance, an achievement that would have been unlikely with a €1bn trade.

Nationwide Building Society’s third covered bond of the year had to offer an attractive new issue premium because there was considerable price sensitivity in the book. The deal illustrates that, despite a technical undersupply of covered bonds, there is a greater balance between supply and demand than perceived, especially for bonds ineligible for the European Central Bank’s purchase programme.

Goldman Sachs has not given up on its Fixed Income Global Structured Covered Obligation (Figsco). Despite bad publicity, the market has moved in Goldman’s favour since the deal was first announced.