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Market wrap

  • NordLB mandates into moderating supply outlook

    NORD/LB Covered Finance Bank is expected to open books for its inaugural five year €500m Lettres de Gage Publiques on Monday after mandating leads on Friday. Bankers expect a less busy week ahead, but believe there is scope for one or two other deals to be announced at short notice. Market conditions remain strong and recent issuance, such as UniCredit’s conditional pass through, have all performed.

  • The week in review: issuers set new records

    Six European covered bond borrowers launched deals worth a total €5bn this week and, despite setting new spread records, all were easily digested and performed well. Cumulative demand stood at nearly €10bn spread across 500 investor orders. But those deals that offered the most attractive spread attracted the most granular books.

Rating news

  • Aareal’s Pfandbriefe to stay safe after merger

    While there is no immediate impact on Aareal Bank's Pfandbrief ratings following its planned acquisition of Westdeutsche Immobilienbank (WestImmo), the rating could change if the pools were merged, said Fitch on Thursday. However, analysts say a merged pool could be better quality and note that the covered bond ratings are well protected.


  • Fix securitization before printing SME backed bonds

    European authorities want banks to provide credit to small and medium sized enterprises through SME backed covered bonds. But they don’t need the funding; they need capital. They need securitization.

Deal reviews

  • UniCredit prices CPT flat to soft bullet

    UniCredit issued its inaugural conditional pass through covered bond on Thursday and despite the new structure, the final spread was flat to where it would have priced a deal from its soft bullet programme. The head of group strategic funding emphasised the deal’s rating stability as the key attribute and not its collateral efficiency.

  • LBBW issues rare Eurodollar Pfandbrief

    LBBW successfully issued a $500m three year Reg S Pfandbrief on Thursday. As the deal funded dollar assets, no swap costs were involved and the overall funding was marginally cheaper for LBBW than the level it could have achieved in euros. But with Pfandbrief yields negative in this tenor, euro issuance would have been impractical.

  • Helaba and Danske enjoy solid receptions

    Landesbank Hessen-Thüringen Girozentrale (Helaba) issued a €1bn Pfandbrief on Wednesday at a final spread that was deeply through mid-swaps but got a strong response as it was able to offer a positive spread to Germany, where yields are negative. At the same time, Danske Bank issued this week’s only euro benchmark. As it was not eligible for the covered bond purchase programme it offered a quite attractive spread.

  • BPIM and Dexia attract multiple oversubscriptions

    The primary market sprang back to life on Tuesday, as covered bonds from lower rated issuers in Germany and Italy attracted books that were many times covered. The successful outcomes illustrated that the market was not concerned about the outcome of negotiations on the extension of the Greek debt bailout or the prospective timing of the first US rate hike.

Secondary market

  • ABN goes soft

    ABN has followed Credit Suisse by issuing a consent solicitation in which it proposes to change 10 outstanding hard bullet covered bonds to soft bullet maturities.

Regulatory developments

  • ECBC to show EC importance of covered bonds in CMU

    The European Covered Bond Council (ECBC) said that it will host a panel discussion with the European Commission (EC) in Brussels next week. The announcement follows the publication on Wednesday of a consultation document on building a Capital Markets Union (CMU).

Mandates & deal pipeline

  • UniCredit set launch CPT structure

    UniCredit has mandated leads for the first deal to be issued off its newly restructured conditional pass through (CPT) covered bond programme, and is expected to launch the deal on Thursday.

In-depth analysis and interviews

  • Über-tight covered bonds set for next-gen structures

    With investors squealing at this week’s new issues that crunched spreads to record lows, next generation covered bonds could meet the sector’s increasingly desperate need for higher yielding products. Both conditional pass through (CPT) and dual recourse structures backed by small to medium sized enterprise loans or infrastructure projects are under way, bankers report.

Analyst research

  • Austrian negative headline risk remains in place

    Despite a string of successful Austrian covered bonds launched recently, Commerzbank analysts are cautious on the outlook for Austrian banks. The analysts list a number of risks and conclude that there is still a substantial chance of more negative headlines emerging in the next few months.

RMBS primary news

  • Nationwide hits the strip with dollar RMBS

    Nationwide Building Society will begin meeting buyers at the ABS Vegas conference on Monday where it is marketing a multi-currency RMBS. The move represents a broadening of the issuer’s return to core funding markets which began in earnest in 2014 when it issued four covered bond benchmarks.

People moves

Deals tracker

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Book runner

Covered bonds €500m+ 12-mos rolling to Jan 01  2015

Lead manager Amount
No of Issues Share %
1 Natixis 9.06 45 8.0
2 BNP Paribas 8.57 39 7.6
3 Barclays 8.05 35 7.1
4 UniCredit 7.40 47 6.6

 league table builder

All covered bonds 12-mos rolling to Jan 06 2015

Lead manager Amount
No of Issues Share %
1 Natixis 15.01 56 7.0
2 BNP Paribas 13.91 50 6.5
3 Barclays 12.71 45 6.0
4 UniCredit 12.22 95 5.7

 league table builder