Secondary market

  • CBPP3 will rescue secondary — but not yet

    WL Bank launched a covered bond into a weak secondary market on Thursday, pricing a five year close to where its 10 year had been trading. Screen prices give the illusion that spreads are holding steady, but in reality banks are scrambling to cut inventory and sales are being made below screen bids. But with primary activity likely to dry up, redemptions set to rise and ECB buying unlikely to slow down, the balance of flows will turn and spreads will tighten, said bankers.

Market wrap

Mandates & deal pipeline

  • Cariparma can work with the right investors

    Cariparma, the eighth largest Italian bank, which is 76.5% owned by Crédit Agricole, will go on the road this week to market its inaugural A2-rated covered bond. Though market conditions are not constructive, recent issuance, which has been placed with high quality investors, has traded more stably than the rest of the market, suggesting success could be within reach.

In-depth analysis and interviews

Deal reviews

  • NordLB expects €131.5bn for 2015

    NordLB research analysts have published their covered bond outlook for 2015, predicting €131.5bn in publicly placed benchmark issuance. This year to date they count €109.2bn, well ahead of 2013’s €93.7bn.

  • Covered bonds hit watershed with OP

    The covered bond market had a watershed moment on Friday when OP Mortgage Bank launched its 10 year. Despite an attractive spread, the deal was unable to get the sort of traction that the issuer may have hoped for. It was no coincidence that as books opened, ECB president, Mario Draghi, raised the prospect of full scale sovereign quantitative easing — something that is likely to make covered bonds look relatively expensive to government bonds.

Rating news

  • Proposed Cédulas liquidity provision offsets lower OC

    A newly proposed legal framework for the Spanish Cédulas market could lead to less overcollateralization, which would in turn lead to downgrades of at least one notch, said Fitch on Thursday. But the introduction of a 12 month liquidity facility could lower the mismatch risk between assets and liabilities leading to a one notch rating improvement, the agency added.


  • The insidious impact of CBPP3

    With covered bond primary issuance unlikely to grow next year and the ECB expected to prevaricate over the merits of full blown sovereign quantitative easing, covered bonds will be its main vehicle for expanding the balance sheet. This week the balance sheet shrank, so it had better step up buying if it wants to hit the requisite €1tr expansion needed to reach March 2012’s levels. That will surely mean its ownership of covered bonds must rise.

Regulatory developments

  • TLAC headwinds scupper supply hopes

    The Financial Stability Board’s proposals outlining total loss absorbing capacity for financial institutions will make issuers prioritise unsecured over secured funding, boding poorly for the supply outlook in covered bond. They may also dampen bank lending, suggesting ultra-accommodative monetary policy will be needed to offset further economic retrenchment.

People moves

  • Scope scoops Fuchs

    Karlo Fuchs has been appointed as head of covered bonds with immediate effect at Scope Ratings. Fuchs joins from Standard & Poor’s where he had worked for 15 years as a senior director and head of covered bond analysis.

Analyst research

  • Investors more positive than expected on CBPP3

    Around half of investors view CBPP3 as an overall positive, according to a Crédit Agricole survey of 89 investors published on Monday. Two thirds of investors expect the programme to have a crowding out effect on secondary markets.

  • Covered bonds to become cheaper than ECB for periphery banks

    The wave of spread compression triggered by Thursday’s CBPP3 announcement is driving covered bond funding costs towards the TLTRO level across the periphery, according to analysis by Crédit Agricole’s covered bond research team in a note published on Friday.

RMBS primary news

  • RMBS supply picks up despite softer tone

    New issue momentum picked up in the RMBS market this week as one Dutch deal was priced and another was announced, along with a sterling deal from a UK bank. However, pricing softened as euphoria over the ECB’s purchase programme began to wane.

Deals tracker

Priced Deals

Search the full priced deals table here

Deals pipeline

Search the full deal pipeline table here

Book runner

Covered bonds €500m+ to May 29  2014

Lead manager Amount
No of Issues Share %
1 BNP Paribas 4.51 20 8.5
2 UniCredit 4.38 29 8.2
3 Natixis 4.09 21 7.7
4 Commerzbank 3.38 21 6.3

 league table builder

All covered bonds to May 29 2014

Lead manager Amount
No of Issues Share %
1 UnCredit 7.60 51 7.9
2 Natixis 7.36 27 7.7
3 BNP Paribas 6.58 23 6.9
4 UBS 5.12 31 5.3

 league table builder