Covered bond teams prepare for tricky 2015
Several high level departures were seen in the covered bond market in 2014 as banks, grappling with the tough market environment, consolidated and focussed on 2015. Though covered bonds are set to remain the regulator’s friend, supply has fallen and this has hit fee income. Despite these headwinds, banks that are in poll position have maintained competency across the value chain, writes Bill Thornhill.
Covered bonds back where they belong, but LCR impact in doubt
Covered bonds were always likely to be eligible assets for Basel III’s Liquidity Coverage Ratio, but when the final wording appeared it turned out to be much better than expected for the product. The long term implications are positive for the asset class, but a near term surge in demand is unlikely, writes Bill Thornhill.
The best hope for covered bonds in 2015
The third covered bond purchase programme will not expand the European Central Bank’s (ECB) balance sheet to the extent needed because the market is too small. And spread tightening will not encourage greater issuance, as the ECB expects. The best hope for covered bonds in 2015 is for the ECB to give up on CBPP3 and turn its attention to the sovereign market where it has a much better chance of success.