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.