Deal reviews

  • ECB cut back in Credit Emiliano and Nordea

    Credito Emiliano became the second issuer to take advantage of the European Central Bank’s (ECB) buying programme, launching a covered bond on Thursday. The deal, which did not need the support of central bank demand, saw an allocation to offical institutions that, at 29%, was not much more than Nordea’s 22%. This indicates that central bank orders were cut back, in contrast to deals launched before CBPP3 began.

  • Nordea prices at tightest non-German spread and offers value

    Nordea Finland has issued the first deal from a eurozone bank that is eligible for the European Central Bank’s covered bond purchase programme. Though it was priced at the tightest ever spread for a 10 year deal for a non-German issuer, investors said it offered good relative value.

  • Czech Raiffeisenbank opens books as TD mandates first in A$

    Czech Raiffeisenbank opened books for the first publicly syndicated euro benchmark from the country on Wednesday and had attracted sufficient order interest at the guidance level to make a deal viable. At the same time, Toronto Dominion Bank mandated leads for its first Australian dollar benchmark.

Rating news

  • Moody’s compares Brazilian law to Pfandbriefe

    Moody’s has published a comparative analysis of the Brazilian and German covered bond legal frameworks. The Brazilian law known as, letras imobiliárias garantidas (LIG), has a number of notable strengths, said Moody’s in a report published late on Wednesday. But as regulators have yet to decide on some features of the law, there are elements of uncertainty.

  • Fitch publishes base case losses

    Fitch has improved transparency in its latest covered bonds surveillance snapshot that now includes information on the base case portfolio loss rate (B PLRs). Cypriot, Greek and Spanish deals are the riskiest in the peripheral Europe while Danish, Belgian and Dutch are the riskiest mortgage programmes in core Europe.

Market wrap

  • Covered bonds back to business as usual

    Covered bonds have taken results of the European Banking Authority’s (EBA) stress tests in their stride with the most vulnerable deal of all widening just three basis points on Monday. Borrowers are expected to return to the primary market this week or early next, ahead of the European Central Bank’s November meeting and US Non-Farm Payrolls. In the meantime, the ECB announced it had bought €1.7bn of covered bonds from Monday to Wednesday last week.

Regulatory developments

  • Spain considers overhaul of Cédulas law

    The Spanish Treasury is proposing to change the country’s covered bond legal framework and on Wednesday asked for feedback from stakeholders by November 24. The move may result in a new regime in which bonds are backed by a tightly defined indexed pool of ring fenced homogenous assets. Though this will result in less collateral, a vast improvement in the quality is likely.


  • Transition challenges of a Cédulas overhaul

    The Spanish covered bond law could be set for profound change that will bring it into line with the best in show schemes. Proposals set out on Wednesday by the Spanish treasury tie into capital requirement regulations and will become unstoppable under their own momentum. The major challenge is not that investors will have less collateral protection but rather the transition process itself. Grandfathering existing deals isn’t a viable option, there would need to be a huge debt exchange of all existing bonds for new ones or a fundamental change in terms and conditions.

Secondary market

  • Germany dominates start of covered bond buys

    Of the national central banks which are buying covered bonds as part of the ECB’s covered bond purchase programme, the Bundesbank has been the most active by a large margin, said two covered bond traders. It is said to have accounted for around a quarter of queries in the secondary market from Monday through to 12pm BST on Wednesday.

Mandates & deal pipeline

  • Suncorp comes back to covereds

    Suncorp-Metway has mandated leads for a five year Australian dollar covered bond, the third in the currency this year and the issuer’s first since November 2012. The deal is expected to be launched this week.

People moves

  • Scope scoops Fuchs

    Karlo Fuchs has been appointed as head of covered bonds with immediate effect at Scope Ratings. Fuchs joins from Standard & Poor’s where he had worked for 15 years as a senior director and head of covered bond analysis.

Analyst research

  • Investors more positive than expected on CBPP3

    Around half of investors view CBPP3 as an overall positive, according to a Crédit Agricole survey of 89 investors published on Monday. Two thirds of investors expect the programme to have a crowding out effect on secondary markets.

  • Covered bonds to become cheaper than ECB for periphery banks

    The wave of spread compression triggered by Thursday’s CBPP3 announcement is driving covered bond funding costs towards the TLTRO level across the periphery, according to analysis by Crédit Agricole’s covered bond research team in a note published on Friday.

In-depth analysis and interviews

  • Podcast: Michel Noel on the global potential of covered bonds

    Michel Noel, practice manager for non-bank financial institutions in the finance and markets global practice at the World Bank speaks to The Cover in a podcast interview about how the development bank assisted Brazil’s Ministry of Finance in drafting its newly released covered bond law — and which countries could be next.

  • Brazilian primary legislation in place but secondary work will take time

    Brazilian covered bond deals will have to wait for further regulatory work to be done, despite the publication of the Brazilian covered bond law — or Letras Imobiliárias Garantidas (LIG) — on Wednesday.

  • The Vienna podcast series

    In Vienna The Cover spoke to three major covered bond investors, the EBA, IMF and head of treasury at a new jurisdiction bank about the state of our global market. We hope you enjoy listening:

  • Covered bond bankers respond to CBPP3

    Covered bond bankers spoke to The Cover in the immediate aftermath of the European Central Bank’s announcement of its third covered bond purchase programme. Though the programme is bullish for spreads, bankers said the ECB would struggle to expand its balance sheet.

  • Draghi reaches for junk but bankers unimpressed by size

    Sub-investment grade ABS and covered bonds will be on the European Central Bank’s shopping list when it begins the private sector purchase programme it hopes will revive real economy lending this month. But stakeholders in both markets remain unconvinced of the size the ECB can achieve and many now see the move as a mere stepping stone to full-blown quantitative easing.

RMBS primary news

  • RMBS supply picks up despite softer tone

    New issue momentum picked up in the RMBS market this week as one Dutch deal was priced and another was announced, along with a sterling deal from a UK bank. However, pricing softened as euphoria over the ECB’s purchase programme began to wane.

Deals tracker

Priced Deals

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Deals pipeline

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Book runner

Covered bonds €500m+ to May 29  2014

Lead manager Amount
No of Issues Share %
1 BNP Paribas 4.51 20 8.5
2 UniCredit 4.38 29 8.2
3 Natixis 4.09 21 7.7
4 Commerzbank 3.38 21 6.3

 league table builder

All covered bonds to May 29 2014

Lead manager Amount
No of Issues Share %
1 UnCredit 7.60 51 7.9
2 Natixis 7.36 27 7.7
3 BNP Paribas 6.58 23 6.9
4 UBS 5.12 31 5.3

 league table builder