Deal reviews

• KBC’s seven year ‘screamer’

  Belgium’s KBC Bank returned to the covered bond market for the second time this year to pull in €1bn of seven year funding at pricing so tight that one of the leads called it “screamingly good”. Despite pricing on top of its interpolated curve and through the Belgian government, the deal attracted strong demand from a broad range of investors.

Rating news

• Fitch upgrades Greek deals as S&P spies stability

  Fitch has upgraded a series of Greek covered bonds, following the sovereign upgrade of the Hellenic Republic and of Greek banks. Meanwhile, Standard & Poor’s said covered bonds had recently shown rating stability despite the fragile environment.

Mandates & deal pipeline

• Canadian, Nordic, German and Italian issuers looking

  The covered bond market is open for almost any issuer and though its unlikely that activity will pick up quickly, there are a number of potential transactions expected in the coming weeks, bankers told The Cover on Monday.

Secondary market

• ECB needs to revive secondary with bond sale, say bankers

  A sharp increase in primary supply is unlikely to appear and save the covered bond market from a dire lack of secondary liquidity, but there are other solutions, bankers told The Cover on Monday. The European Central Bank holds more than €60bn in covered bonds and releasing some of these into the secondary market would ease the pain, they said.

In-depth analysis and interviews

• SME-backed covered bond debate drags on

  The subject of SME-backed covered bonds continues to provoke a sharp division of opinion within the industry. And it was a lively topic at the annual covered bond investor conference, held on Thursday in Frankfurt.

Analyst research

• Cédulas safe from Andalucian grab, says RBS

  The Spanish region of Andalucia’s controversial plans to expropriate properties and stop evictions should not affect Cédulas holders, RBS said on Tuesday. Last week the regional government of Andalucia proposed a decree law to temporarily expropriate properties from financial entities if they are about to evict the occupants.

• Co-op could fall to junk RBS warn but collateral is solid assure DB

  Co-operative Bank’s only outstanding covered bond widened further on Monday as RBS warned that the bank’s covered bond rating could fall below investment grade.

Market wrap

• Popular tests appetite with tightly priced tap

  Banco Popular Español got the primary covered bond market off to a strong start on Monday after it took advantage of the prevailing demand for higher yielding bonds with a tightly priced tap of its March 2017 bond.

Regulatory developments

• Covered bond regulatory uncertainty may benefit ABS

  Regulatory uncertainty about the potential bailing-in of bank debt could strengthen the ABS market, as securitised assets are off balance sheet, covered bond investors said this week at a conference in Frankfurt.

• Morocco to keep it local with new covered bonds

  Morocco’s government is set to establish Africa’s first covered bond regime, as it looks to promote mortgage lending in the face of rising demand for affordable housing, after a decade of growth in the country. However, bond issues are likely to be local currency denominated, limiting the scope for investment from the traditional covered bond buyside, said Standard & Poor’s.

Opinion

• Covered bonds could go tighter still

  Covered bond spreads have been tightening for well over a year, but now core markets are trading close to swaps or through them, there is a sense that performance potential is becoming limited. But this might not be so, The Cover argues. If covered bonds are put on an equal pedestal to sovereign bonds, the bank bid should improve greatly and with supply still sparse, spreads are likely to tighten even further.

RMBS primary news

• Santander and Rabobank keep RMBS investors happy

  Santander UK has announced a new deal from its Holmes master issuer RMBS shelf. The prospective deal is likely to offer a significant spread pick up compared to UK covered bonds. And Rabobank has privately placed RMBS issuance from its Obvion subsidiary.

People moves

• DNB’s Stray retires

  Helge Stray, senior vice president at DNB Boligkreditt’s investor relations and long term funding department, retires from the bank on Friday after 14 years of service.