Market wrap

• BPCE flies with rare French five year

  BPCE launched the first French five year trade of 2012 on Monday, into a market still desperate for new supply across the curve.

Deal reviews

• Sabadell helps bring Spain’s second tier back to life

  Banco Sabadell brought the first deal in nine months from a second tier Spanish issuer on Monday. Rather than wait for a second round of ECB long-term refinancing operation (LTRO) funding, the borrower opted for a more expensive funding option to show the market and rating agencies that it still has wholesale access.

• Coventry's floater proves sterling demand

  Coventry Building Society followed Santander into the short end on Friday, launching a three year sterling floater – the fourth sterling deal in this format since the start of 2012.

Secondary market

• Tenders spread to core Europe

  Austria’s Bawag has invited holders of its €1bn 4.25% 2014 to tender their notes and is willing to buy up to €500m at a spread of mid-swaps plus 55bp. The offer is unusual for being the first covered bond tender from a borrower in core Europe. As such, it contradicts conventional wisdom which, until now, had suggested that tenders would make sense only for peripheral issuers.

Regulatory developments

• New Belgian government raises hopes for covered bond law

  The formation of a Belgian government in December 2011, breaking a year and a half of political deadlock, has improved the chances of Belgium’s covered bond law finally being approved.

Analyst research

• Covered fiscal strength indices win investor backing

  Barclays Capital’s new fiscal strength covered bond indices, which adjust the market value weighted exposure of country risk based on fiscal strength, have won the support of investors polled by The Cover.

• Senior stampede adds value to covered bonds

  The ECB's Long Term Refinancing Operation could increase the bid for covered bonds through its restorative effect on the senior unsecured market.

RMBS primary news

• Rabobank's Storming RMBS success

  Rabobank's Obvion managed to almost double the size of its Storm 2012-1 RMBS, while tightening pricing on the short tranche by 10bp. The success of the trade surpassed expectations of market participants. Though covered bonds would be cheaper, the RMBS financing is isolated enough to protect the bank's top senior rating.

In-depth analysis and interviews

• Secured funding swept up in LTRO frenzy

  In a flurry of activity that offered another glimpse of the spare cash washing around the European banking sector after the ECB’s first Long Term Refinancing Operation (LTRO) in December, Spain’s CatalunyaCaixa and Banco Popular Español launched tender offers this week, buying back ABS, covered bonds and hybrids.

• Roundtable: Oz issuers discuss market’s future

  Australian issuers have priced over €11bn across five currencies thus far in 2012, ensuring that despite a steep drop in euro benchmark issuance the global covered bond market retains its record breaking pace.

Mandates & deal pipeline

• Gaping window attracts few issuers

  Issuers could hardly hope for a better backdrop to bring benchmark deals. Bond yields are falling and investors are looking to put cash to work across a swathe of asset classes to capitalise on the rally, as seen most emphatically in the senior unsecured market this week. Yet Norway’s Sparebank Vest Boligkreditt remains the only obvious candidate for a deal next week.

Opinion

• What the Coeur case means for covered bonds

  French courts threw out contractual rights when they ruled to protect the owners of the Coeur Défense tower from their creditors. But the answer to this isn’t self-righteous indignation. It’s to beware of any market that’s never seen a default.

Rating news

• Eurohypo downgrade priced in

  Moody's looks set to downgrade Eurohypo's Pfandbriefe below triple A, not that it should matter. The rating move is already discounted, and with German supply in such short supply, its outstandng bonds are set to remain well supported. Moreover, with more ECB cheap money coming, Pfandbrief issuers have very little incentive to pay up and go to the public market.

People moves

• Postbank stalwart Garre moves on

  Eusebio Garre has decided to leave his position as head of funding at Deutsche Postbank, ending a 15 year stint at the bank.