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Secondary market

  • Depfa ACS soars as sale fears dampened

    Depfa ACS covered bonds tightened by 30bp on Thursday morning, after German press reports fuelled speculation that it would not be sold to an unrated buyer, but would remain in the hands of the German government. As Depfa’s bonds have a higher rating than other domestic Irish covered bonds, they have potential to tighten much further, bankers told The Cover on Thursday.

Market wrap

  • Constructive conditions buoy deal hopes

    There are a few transactions that could potentially be announced at short notice as, despite continuing geopolitical strains, market conditions remain strong, bankers told The Cover on Tuesday. However, with clients away from their desks, overall activity is likely to remain muted.

Mandates & deal pipeline

  • Banco Santander Chile structures new step on road to benchmark

    Banco Santander Chile has issued a new deal from its covered bond programme, Fitch said on Wednesday.

  • Bank of Montreal lines up

    Bank of Montreal’s (BMO) covered bond programme was recently signed off by the Canadian Mortgage Housing Corporation (CMHC), giving rise to speculation that it could return to the covered bond market after Easter with a newly set up programme and a legally compliant covered bond deal. A still-favourable cross currency swap suggests it could become the fourth Canadian bank to issue in euros this year.

Regulatory developments

  • EBA lets covered bond issuers off the hook on swaps

    The European Banking Authority proposed this week that covered bond new issue swaps should receive special treatment, ending months of uncertainty over derivatives proposals that could have delivered a fatal blow to the covered bond market.

  • Large exposure rules may hit Danes

    Covered bonds are currently exempted from large exposure rules set out in the fourth iteration of the capital requirement directive. But this could change in 2019, if newly released proposals set out by the Basel Committee on Banking Supervision (BCBS) are put into place. Though the restrictions will reduce the appeal of covered bonds, it should not be a problem in practice for most countries except Denmark.

  • NSFR proposal leads to unstable funding

    The Swedish Bankers Association has published a letter to the Basel Committee on Banking Supervision which says that the Net Stable Funding Ratio (NSFR) would cause banks to rely less on covered bond funding, and more on alternative sources which are not as stable.

In-depth analysis and interviews

  • An end to 10 years of hurt for the once mighty Pfandbriefe

    With redemptions set to exceed issuance for a year or two longer, Pfandbrief spreads are expected to remain tight. But as regulatory uncertainty dissipates, both mortgage and public sector backed supply should begin to take off again. Could this be the start of a new era for this, the most revered and established of all covered bond sectors?

  • Covered bonds take the helm in Italy’s funding renaissance

    A flurry of issuance from banks has led to a positive outlook for the Italian covered bond market, as financial institutions — old and new — move away from central bank liquidity.

  • Waiting for the icing on the resolution cake

    The closer the EU’s bank resolution rules come, the better for the covered bond market, as it is excluded from any possible bail-in plans. But despite the assurances that covered bond investors will escape a bail-in, nobody knows exactly how. Uncertainty remains over covered bonds and liquidity too, with increasingly strident briefing and counter-briefing on whether to count covered bonds in the top class of regulatory liquidity.

  • Issuers rule, as long as they’re careful

    With deleveraging nowhere near finished and loan growth in most European banking sectors sluggish, covered bond bankers are struggling to see an end to dwindling supply and tightening spreads. The Cover goes in search of anything that could buck the trend.

  • Pfandbriefe strive to stay ahead of the pack

    The bastion of the covered bond market is imposing greater transparency requirements on issuers, but the greater immediate challenge for banks is smooth deal execution in a stiflingly tight spread environment.

  • Broadening covered bond market challenges investors

    Amid pressure to revive Europe’s economy by supplying credit to small and medium-sized enterprises, covered bond issuers are coming up with innovative ways to pool SME assets. In the hunt for better ratings, they are looking to pass-through structures but as the definition of covered bonds broadens, new risks lie in wait for investors.

Analyst research

  • French ESNI a close cousin of CBs and likely QE fodder, says BBVA

    The new Banque de France SME funding vehicle could be used for ECB quantitative easing, says BBVA. The Spanish bank’s research team say that, given the ECB’s new readiness to fund SME assets through QE, the Banque de France programme could be the ideal vehicle to channel these funds.

Deal reviews

  • SG gets great execution by limiting deal size

    Société Générale returned to the covered bond market on Tuesday after a four month absence to issue the sixth French covered bond deal of the year and the third from France with a 10 year maturity. By limiting the deal size, leads were able to price flat to its curve, and with barely any premium to the French government.

  • BHH scores success as Ukraine’s woes fail to upset

    After mandating leads for a roadshow at the end of March, Berlin Hypothekenbank (BHH) opened books on Monday for what bankers believe could be the one and only covered bond issue of the week. Though the deal had been widely anticipated, bankers said Ukrainian headline risk could have derailed timing.

Rating news

  • Nine multi-Cédulas downgraded to junk by S&P

    Standard & Poor’s downgraded nine multi-Cédulas from investment grade to sub investment grade on Tuesday, along with a further 11 downgrades, five upgrades and three affirmations. The actions, which were driven by the agency’s CDO methodology, and affect €49bn of securities, were flawed, say bankers.


  • Bigger banks aren't always stronger

    A bigger bank is not necessarily the same as a stronger bank, which is why the Bank of Italy’s draft proposal redefining which borrowers can issue covered bonds should be applauded.

RMBS primary news

  • RMBS to unlock capital for French banks

    Some of France’s biggest banks are set to give the country’s meagre RMBS market a boost this year as they set up programmes in response to regulator pressure to free up capital.

People moves

  • Hoggett latest to leave BAML’s DCM platform

    Julia Hoggett is leaving Bank of America Merrill Lynch to join the Financial Conduct Authority (FCA), to run the investment banking supervision division, starting in early May. Her departure follows a string of high profile exits from the firm.

Deals tracker

Priced Deals

Search the full priced deals table here

Deals pipeline

Search the full deal pipeline table here

Book runner

Covered bonds €500m+ to April 9  2014

Lead manager Amount
No of Issues Share %
1 BNP Paribas 4.39 18 10.6
2 UniCredit 3.51 23 8.5
3 Natixis 3.09 16 7.5
4 Barclays 2.55 13 6.2

 league table builder

All covered bonds to April 9 2014

Lead manager Amount
No of Issues Share %
1 BNP Paribas 6.41 22 8.6
2 UnCredit 6.28 41 8.4
3 Natixis 5.69 21 7.6
4 UBS 3.64 21 4.9

 league table builder