UK

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.

Aareal Bank and UniCredit Bank Austria priced successful euro deals in five and 10 year maturities on Monday, while Abbey issued a three year in sterling. All three priced at the tighter end of initial thoughts. However, prospective core borrowers with larger funding needs may need to offer more tempting spreads as the market softened on Monday.

Lloyds Bank issued the first sterling covered deal from a UK issuer in the home currency since May 2012 on Tuesday. Despite pricing at a fraction of the 170bp spread that Clydesdale Bank paid for the last UK sterling floating rate deal, Lloyds managed to achieve the highest level of demand for this format in local currency.

Greencoat UK Wind, a renewable energy investor, has raised £83m through a placing, open offer and offer for subscription.

Co-operative Bank has asked holders of its £600m Moorland covered bonds due November 2021 to vote on an extraordinary resolution.

Bank of Scotland is to tender four covered bonds denominated in euros and sterling, it said on Monday.

Primary covered bond market activity swelled on Tuesday, with as many as four deals pricing since Monday’s close in Europe. Commerzbank, Nykredit and Westpac all made appearances (see other story) but, the pride of the pack was Abbey, which priced the first publicly syndicated UK covered bond in almost two years, setting a target size of €1bn.

The covered bond market will benefit from the UK regulator’s changes to eligible securities for bank liquidity buffers, according to Barclays research, but it has warned many questions remain about the new rules.