UK

Investors should consider switching out of the senior unsecured debt issued by Abbey National and Lloyds Banking Group and buying their covered bonds, said Barclays on Friday. The scarcity of supply in both asset classes has driven a technical tightening which, the analysts say, is not fundamentally justified.

National Australia Bank has responded to reverse enquiry from cash-laden sterling investors by selling a £500m three year sterling floater on Tuesday, in what is the first piece of benchmark sterling issuance since January.

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.

Münchener Hypothekenbank tapped its recent three year sterling floater for another £100m on Tuesday, taking advantage of a market window before holidays and programme updates prevent issuance.

Aareal Bank closed a £200m sterling FRN on Wednesday, making its public debut in the currency two decades after entering the UK commercial real estate market.

Greencoat UK Wind, a British closed-ended infrastructure fund with a focus on wind energy, completed a £260m oversubscribed IPO on Friday, seizing on appetite for UK infrastructure funds.

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.

Six UK banks drew £4.36bn between them from the Funding for Lending Scheme, the Bank of England revealed on Monday. Some of the biggest borrowers have also cut lending, according to data released by the BoE. This suggests that net covered bond issuance from UK banks will be negative in 2013, despite higher redemptions due next year than in 2012.

Sanjay Sofat, regional treasurer for Lloyds TSB in New York, is returning to London to head the bank’s senior funding team.

Investor sentiment towards Spain and Italy has improved since August, according to a Crédit Agricole survey. However, most buyers’ credit lines are unchanged, which means many still cannot take advantage of remarkable relative value.

Core covered bonds are performing poorly, with low coupons putting investors off, according to Deutsche Bank analysts. Higher yielding peripheral paper could benefit as a result, but the prospect for fresh benchmark trades from southern Europe remains uncertain.

Norddeutsche Landesbank could open books on a debut dollar covered bond as early as Tuesday morning, said syndicate leads on Monday. But the outlook for a first sterling trade from Deutsche Pfandbriefbank is more uncertain.