UK

Well done Goldman Sachs, you’ve managed to devise a structure that has both the covered bond market and the ABS market talking at the same time. The covered bond market seems to have adopted the attitude that ‘imitation is the sincerest form of flattery, just don’t try to pass it off as a real covered bond’. The ABS market seem to have adopted an ‘anything the covered bond market can do..’ attitude.

Since Goldman’s FIGSCO (Fixed Income Global Structured Covered Obligation) trade hit the screen, capital markets commentators, The Cover included, have been scratching heads and stroking beards about what it actually is.

Goldman Sachs may have been hoping that it could get away with calling its newly structured triple recourse hybrid a covered bond. Though it is being marketed to covered bond investors, FIGSCO is clearly nothing like a classical covered bond. But Commerzbank, NIBC and NordLB all encountered controversy when they successfully issued innovative deals, suggesting the clumsily named acronym may be a success – especially in an environment of furious yield chasing and a shrinking triple A universe.

Nationwide opened books on Wednesday for the first post-crisis UK dual tranche covered transaction, and only the second from any jurisdiction this year. The success of the deal may establish dual tranche syndication as a benchmark for those issuers looking to raise size without compromising execution.

Nationwide has mandated leads for the third UK covered bond in euros this year. Though a firm decision on structure and tenor has not been taken, the issuer is testing appetite for a dual tranche offering that could involve the longest dated issuance seen in euros for years, to be launched Wednesday.

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.

Yorkshire Building Society issued its first euro issuance in four years on Wednesday morning, a deal that bankers said offered a generous spread to fellow UK names.

Bank of Scotland and Lloyds Bank announced a tender for three short-dated covered bond deals denominated in euros and sterling on Tuesday. This will be the borrower’s second liability management exercise in covered bonds undertaken within the past year.

Credit sentiment is positive, and it seems unlikely that the European Central Bank would take anything other than an accommodative stance at next week’s policy meeting, but bankers are getting cautious that valuations are becoming overstretched, particularly in those markets which have until now been considered safe havens.

On Wednesday Lloyds Bank issued its first euro issuance since January 2012, and the UK’s first euro benchmark deal of 2014. The €1bn no-grow seven year transaction was both the tightest and most oversubscribed UK deal issued in the last three years.

The build up to Íslandsbanki’s annual Thorrablot celebrations — for the uninitiated, it’s an Icelandic midwinter festival — is always fraught with nerves, anticipation and a slightly sickly feeling at the prospect of crunching down on goats’ testicles. But this year’s shindig on Thursday night has some added spice — or, more appropriately, pickle — as it could be the last event ever.

UK issuers moving away from the cheap liquidity of the Bank of England’s Funding for Lending Scheme are likely to opt for covered bonds over RMBS, syndicate bankers told The Cover on Friday. This preference has contributed to a sluggish start to the year for the ABS primary market, with only a trickle of mandates on the horizon.