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.
Peripheral widening a buying opportunity, say dealers
Covered bonds from the periphery widened in the run up to Spain’s 10 year auction, bankers told The Cover on Tuesday, but there was not much selling.
Spanish government bond yields widened around 5bp-6bp on Tuesday morning and yields were up nearly 40bp from the start of the month.
Despite downgrades, investment grade to junk re-tightens
Overnight downgrades of Italian and Spanish covered bonds to junk are likely to have only a fleeting impact on spreads, bankers said today. The hunt for yield and a more flexible approach to assessing credit has ensured there is a pool of ready demand for speculative grade debt.
Secondary set for grind with or without rate cut
The secondary covered bond market is grinding tighter and a rates cut from the European Central Bank will only underline the bid, said covered bond traders on Wednesday. And with the short end likely to outperform, a curve steepening may well follow.
KölnBonn aims around five years; periphery performs
Sparkasse KölnBonn is set to announce a deal in the belly of the curve, somewhere in the region of five years, bankers told The Cover on Monday. Other issuers, possibly from Europe’s periphery, are also considering deals, said bankers, after further strong performance in the secondary market.
MTS signs CA-CIB to new sponsored access platform
MTS Credit platform has signed up Crédit Agricole CIB for its long awaited sponsored bank access platform, MTS Prime, it announced on Thursday. MTS Prime gives institutional investors the ability to trade directly on the bank’s order book and responds to regulatory initiatives focussed on transparency and capital adequacy.
Supported secondary awaits primary
With the exception of difficult credits like Monte Dei Paschi, the European covered bond market was in good shape on Thursday with secondary market demand being noted across a number of names and jurisdictions.
Sub-investment Cédulas sell-off in secondary
Multi-Cédulas came under pressure in the secondary market on Monday after Standard & Poor’s took rating action on 51 classes totalling almost €100bn late last week.
Peripheral markets steady after Cyprus
Trading in Spanish and Italian covered bonds was relatively stable against asset swaps on Monday, while they tightened versus their domestic sovereign bonds, following the news that Cyprus faces a bail-out from the European Union.
Spain in favour as Bankia goes bigger on buyback
Bankia bought back a much higher than expected €1.2bn of its covered bonds in a liability management exercise this week, paying a decent premium. Meanwhile Spanish covered bonds are performing strongly, after investors received over €5bn of Cédulas redemptions on Thursday.