Market wrap

  • Euro covered bonds need a hero

    It will take a courageous issuer to re-open the euro benchmark covered bond market, despite notable improvements in rates and a reduction in volatility. Whoever comes will have to start the pricing process with a generous new issue concession and though many issuers are monitoring conditions, no one has pulled the trigger yet.

  • Swedbank's senior success suggests covered bonds on the way

    Benchmark euro covered bond issuance from a core borrower is expected soon after Rabobank and Swedbank reopened the senior market. Meanwhile, DNB Boligkreditt followed ANZ into the dollar 144A market on Wednesday with a similarly sized deal, in the same tenor and at the same price.

Secondary market

  • Fitch bends rules and saves the OBGs of MPS from junk

    The covered bonds of Banca Monte dei Paschi di Siena (BMPS) rallied by 20bp on Friday as speculation mounted that Fitch would not downgrade the bonds to sub-investment grade, as had been feared.

  • ECB to exacerbate extreme volatility

    European Central Bank board member, Benoît Coeuré, has acknowledged that extreme volatility is a worrying sign of reduced liquidity. But even so, the central bank will step up its purchasing in a move that is expected to accelerate the exodus of real money demand from covered bonds. These investors will be the slowest to return when buying eventually stops. This will hit peripheral issuers the hardest, said analysts at Crédit Agricole CIB research.

Rating news

  • MPS may be junked as Fitch removes sovereign support

    On Tuesday evening Fitch downgraded a swathe of European bank ratings, as it no longer gives any benefit to systemic state support. The downgrades were not expected to have much impact on covered bonds, but a few programmes may be hit. The most extreme case is likely to be Banca Monte dei Paschi di Siena (BMPS), whose July 2024s widened 20bp on Wednesday.

  • BRRD makes Moody’s and Fitch take opposing views on AIB

    The Bank Recovery and Resolution Directive was supposed to be universally good for covered bonds because they are excluded from being bailed in. But on Wednesday and Thursday Moody’s and Fitch took opposing views on Allied Irish Banks due to the implementation of their methodologies that take account of the same new regime.

Deal reviews

  • ANZ takes size in dollars as DNB lines up

    The dollar market continued to sustain covered bonds on Wednesday as DNB mandated leads for a five year, a day after ANZ issued $1.25bn in the same tenor. The Australian bank got better execution than would have been achieved in euros and could have priced even tighter. The excellent result is testimony to the issuer’s long absence and to the depth of demand evident across the dollar fixed income market.

  • NordLB’s €500m 2019 tap is no barometer

    NordLB reopened its four year public sector backed Pfandbrief on Wednesday in a move which locks in cheap funding. But the 10bp yield offers little buffer in a market characterised by rate volatility.

  • Abbey struggles in sterling as ANZ lines up in dollars

    Torrid market conditions have kept issuers away from the euro benchmark market since April 29, forcing borrows to consider alternative currencies. On Tuesday, Abbey printed a £500m three year sterling deal, and even though the deal was not subscribed, bankers felt the sterling market was still open. Separately, ANZ has mandated leads for the second dollar benchmark from Australia this year.


  • The ECB's purchases create the volatility it deplores

    The European Central Bank has expressed concern about extreme rates volatility. But until it stops buying and allows the private sector to become re-established, its true mission as liquidity provider of last resort will remain in conflict with its determination to expand its balance sheet.

RMBS primary news

  • Virgin, Dilosk and Achmea keep RMBS active

    Achmea Bank has priced its first RMBS of the year, Virgin Money has announced a mandate for a new UK RMBS and another issuer is planning to sell the full capital structure of an RMBS backed by Irish mortgages.

Analyst research

  • Shrinking Pfandbriefe get cleaner

    The German Pfandbrief market continues to shrink, driven by a decline in the public sector, which is now almost the same size as the growing mortgage sector, according to the first quarter cover pool data recently published by the Association of German Pfandbrief banks (VDP).

In-depth analysis and interviews

  • Living with a covered bond shortage and the big QE squeeze

    The relative value of covered bonds compared to sovereign bonds has improved, but the pace of European Central Bank buying has not slackened, as had been widely hoped. And even though the ECB has marginally scaled back primary market purchases this year compared to last, it remains an aggressive secondary market buyer.

Mandates & deal pipeline

  • Long core covered bonds are too rich to sell

    The long end of the French, Belgian and Dutch covered bond market is effectively closed for primary issuance because the rout in government bonds has made them too expensive. But bankers are hopeful that, with careful consideration of tenor and pricing, benchmark issuance should eventually return in shorter tenors, though probably not until June.

Regulatory developments

  • ECBC will struggle to promote new ESN (updated)

    Covered bond bankers and investors reacted with scepticism to the European Covered Bond Council (ECBC)’s proposed new dual-recourse bond structure. The lack of standardisation across SME reporting means that using them in the collateral pool will be problematic. In addition, even if these concerns are ironed out, issuers will have to pay up for the product, something which makes little sense in such a low cost environment.

  • ECBC proposes new SME bond structure to boost CMU plans

    The European Covered Bond Council (ECBC) has proposed a new dual-recourse bond structure to meet the European Commission’s plan for a Capital Markets Union.

People moves

  • Loder leaves Barclays

    Bernd Loder has resigned from Barclays where he had worked as a director on its sovereign, supranational and agency syndicate desk in London.

Deals tracker

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Book runner

Covered bonds €500m+ YTD to Mar 27  2015

Lead manager Amount
No of Issues Share %
1 Natixis 3.90 25 9.6
2 HSBC 2.93 15 7.2
3 Credit Agricole 2.79 17 6.8
4 BNP Paribas 2.79 12 6.8

 league table builder

All covered bonds YTD to Mar 27 2015

Lead manager Amount
No of Issues Share %
1 Natixis 4.50 28 6.4
2 Barclays 3.91 18 5.6
3 HSBC 3.84 19 5.5
4 RBC CM 3.80 10 5.4

 league table builder