UK

SNS Bank has released guidance for its newly structured Hermes XVIII RMBS, just 15bp wider than where the bank priced a covered bond one month ago. The move follows Yorkshire Building Society’s Brass No 2 RMBS, which last week set the tightest spread for a UK RMBS since the onset of the financial crisis — and a level tighter than where sterling covered bonds trade.

OTP Mortgage Bank on Thursday launched the first euro covered bond from Hungary since November 2011, uncovering enough demand to increase a short dated floating rated trade. Meanwhile, National Australia Bank’s recent 14 year sterling offering has widened in the secondary market, after demand proved lacklustre for its attempted long end benchmark.

National Australia Bank opened books on an ultra long dated sterling benchmark on Wednesday hot on the heels of Commonwealth Bank of Australia, which became the first non-UK issuer to tap the sterling long end less than a week ago.

SSA and corporate markets were busy on Tuesday, keeping the primary covered bond quiet. But issuance should improve this week as investors filter back from holiday, said bankers, though they warned that as spreads have tightened a long way in a short time the market may widen after the initial flurry of deals.

After the drama and excitement of UniCredit pricing through BTPs, the European covered bond market has returned to normal — only to be outshone by senior unsecured, where three deals are on the way.

The stressed cover pool losses of Australia’s covered bonds are worse than those in core Europe, Moody’s first performance overview of the jurisdiction revealed on Tuesday. However, Australia still boasts highly rated issuers and impressive collateral scores.

European covered bond issuers, along with senior unsecured financials and investment grade corporates, were this week presented with excellent funding conditions, despite a ratcheting-up of pressure on Spain and Italy in the early part of the week.

Suncorp Bank could turn to the euro market for its next covered bond trade after launching an inaugural deal in Australian dollars this week. Meanwhile, both tranches of Clydesdale Bank’s domestic debut were trading tighter on Friday morning. But though the borrower said it will be a repeat issuer in the covered market, the euro basis swap will consign it to sterling for the time being.

Clydesdale Bank sold a debut benchmark covered bond on Thursday, which was originally mandated in 2010. The borrower opted to take its first step in sterling, and took advantage of demand at both ends of the curve with a well placed dual tranche trade.

The UK’s Clydesdale Bank has finished a domestic roadshow and could launch an inaugural benchmark mid-week after receiving final investor feedback on Tuesday. Australia’s Suncorp Bank, meanwhile, is expected to announce a formal mandate for its own domestic debut later in the week.

Clydesdale Bank will meet investors in London and Scotland this week ahead of a potential sterling trade. It failed to bring an inaugural euro transaction to market last year, but now approaches an undersupplied sterling market with a bolstered balance sheet and strengthened credit story.

Despite the holiday shortened week, activity in the secondary covered bond market has been relatively good. Though not all houses attest to seeing flows, some banks have seen quite a lot. German and Scandinavian markets are very well supported, the UK has performed very well, France is mixed and Spain is offered.