UK

Concrete plans for new issue projects next week appeared thin on the ground this (Friday) morning, but this could be a misleading indicator of forthcoming supply. At least three issuers are on the road next week, Spanish banks are emerging from blackout periods, and bankers said that French issuers are likely to be encouraged by a successful Compagnie de Financement Foncier Eu1bn 10 year transaction sold yesterday.

Royal Bank of Scotland built the second biggest order book for a covered bond this year to price a Eu2bn 10 year deal yesterday (Thursday), which a syndicate banker at one of the leads said was a reward for the careful execution and strong performance of the issuer’s previous transactions. Dexia Kommunalbank Deutschland stuck to the short end of the curve to raise Eu1bn of funding via a three year public sector Pfandbrief.

Investors flocked to a Eu2bn Royal Bank of Scotland covered bond today (Thursday), attracted by the opportunity to lock in a 4% coupon for 10 years, while a Eu1bn three year Dexia Kommunalbank Deutschland issue was also oversubscribed as primary market activity stepped up a gear following a Eu1bn deal from BNP Paribas Public Sector SCF yesterday.

BNP Paribas Public Sector SCF launched a Eu1bn five year obligations foncières today (Wednesday) that is only the fourth French benchmark covered bond sold in six-and-a-half weeks, while yet another Italian is planning to tap the market and the UK’s Royal Bank of Scotland is lining up a 10 year Regulated Covered Bond.

Justin Fox will be leaving Nationwide Building Society, where he has been head of treasury markets, in the New Year.

Bank of England executive director Paul Fisher indicated in a speech last week that the Bank is unlikely to be swayed by lobbying for more support for the covered bond market, and distanced the UK central bank’s position from special treatment afforded the asset class by the European Central Bank.

Moody’s upgraded Bradford & Bingley’s senior unsecured rating from A2 to Aa3, on stable outlook, yesterday (Tuesday), after an analysis of government guarantee and liquidity arrangements.

Münchener Hypothekenbank attracted strong demand for a Eu1bn three year public sector Pfandbrief launched today (Tuesday) despite it coming at the tightest level for a sizeable new covered bond since August 2008. Meanwhile, the UK’s Abbey National Treasury Services yesterday sold its third and biggest benchmark of the year.

Abbey National Treasury Services today (Monday) launched a seven year covered bond that is the euro benchmark market’s first new issue since fellow UK issuer Lloyds TSB Bank sold a Eu2bn 10 year deal last Wednesday. Meanwhile, Banco Popular Español has completed an exchange offer and the first jumbo Pfandbrief since June is being prepared.

Lloyds TSB Bank is understood to have attracted more than Eu3bn of demand for a 10 year covered bond this (Wednesday) morning, demonstrating strong support for the long end and UK names. The issue comes after SNS Bank sold a Eu1bn 10 year yesterday (Tuesday), with the issuer citing yield levels as a key factor in its execution.

Yorkshire Building Society launched its first benchmark covered bond since 2007 yesterday (Tuesday), a Eu600m five year Regulated Covered Bond that built on improving sentiment towards the UK, according to the issuer.

Five issuers piled into the euro covered bond market in one of its busiest ever sessions this (Tuesday) morning to take advantage of supportive conditions. Supply included the first deals in a maturity longer than 10 years since June.