UK

A Eu1bn 12 year Barclays Bank issue yesterday (Tuesday) met with strong demand from insurance companies and asset managers attracted to its 4.25% coupon, according to bankers at the leads, with pricing fortunately coming ahead of a fall in absolute yields.

Barclays Bank will today (Tuesday) price the first benchmark covered bond launched outside France and Germany in nearly a month after building an oversubscribed order book for a Eu1bn 12 year issue.

Standard & Poor’s has affirmed the covered bonds of Nationwide Building Society, Banques Populaires, and HSBC Bank at AAA, but downgraded those of Yorkshire Building Society to AA+. An upcoming redemption could lead to positive rating action for Yorkshire, however.

Dexia Municipal Agency has launched a 12 year obligations foncières issue, the longest dated benchmark covered bond of the year, with the order books clearing the Eu1bn mark earlier this (Wednesday) morning. Meanwhile, Lloyds TSB has completed a non-deal roadshow for its covered bond programme.

Caixa Geral de Depósitos is set to take Abbey’s place as the record ninth benchmark covered bond issuer this week, after the Portuguese but not the UK bank decided to brave the week’s widening market.

The benchmark covered bond market is today (Wednesday) set to break through the previous record for issuance in a week, with HSBC Covered Bonds and UBS having launched seven and three year deals, respectively, and Abbey understood to be whispering a five year issue.

Lloyds TSB Bank’s Eu15bn global covered bond programme has been added to the UK’s Regulated Covered Bond register.

Three issuers announced mandates this (Monday) morning, ensuring that the pipeline remains bulging even after three issuers closed books on new issues, as the pace of supply showed no sign of relenting in the second week of the new year.

Standard & Poor’s has taken the first actions under its new covered bond rating methodology, affirming six programmes’ AAA ratings.

Next week promises to be as busy as this week’s record opening to a year, with two more issuers having officially announced plans for benchmarks in the past 24 hours on top of three outstanding mandates. Supply of Eu5.5bn yesterday (Thursday) took the week’s total to Eu10.25bn from seven deals, just short of the eight totalling Eu11bn in the busiest ever week for the covered bond market at the end of September.

With four new jumbos hitting the market this (Thursday) morning, the number of benchmark issues this week is second only to the last week of September. However, investors have expressed disappointment about what they called expensive spread levels.

Fitch on 22 December affirmed Northern Rock’s covered bonds at AAA based on its revised criteria for assessing liquidity risk in covered bonds, without giving credit to a guarantee for the covered bonds provided by the UK Treasury.