In-depth analysis and interviews

• SME-backed covered bond debate drags on

  The subject of SME-backed covered bonds continues to provoke a sharp division of opinion within the industry. And it was a lively topic at the annual covered bond investor conference, held on Thursday in Frankfurt.

Deal reviews

• Stadhypotek sells dollars as Nordics tighten towards Canadians

  Sweden’s Stadshypotek took the year’s total for dollar covered bond issuance past $10bn this week with a $1.25bn five year deal. Nordic issuers’ spreads are closing in on those of their Canadian peers and dollar covered bonds from many countries have become expensive compared to Treasuries, said Barclays analysts.

• ING rides rarity with ‘fair’ 10 year

  ING Bank offered buyers a rare bite of Dutch covered bond supply on Wednesday and launched the country’s first euro benchmark in nine months.

Secondary market

• 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.

Rating news

• BPM bonds headed for triple-B

  Banca Popolare di Milano’s covered bonds face a ratings cut after Moody's downgraded the bank on Thursday. Although BPM’s bonds will remain investment grade, more and more covered bonds are slipping into triple-B territory, said analysts, though structural enhancements could help stop the slide.

Analyst research

• Cédulas safe from Andalucian grab, says RBS

  The Spanish region of Andalucia’s controversial plans to expropriate properties and stop evictions should not affect Cédulas holders, RBS said on Tuesday. Last week the regional government of Andalucia proposed a decree law to temporarily expropriate properties from financial entities if they are about to evict the occupants.

• Co-op could fall to junk RBS warn but collateral is solid assure DB

  Co-operative Bank’s only outstanding covered bond widened further on Monday as RBS warned that the bank’s covered bond rating could fall below investment grade.

Market wrap

• Popular tests appetite with tightly priced tap

  Banco Popular Español got the primary covered bond market off to a strong start on Monday after it took advantage of the prevailing demand for higher yielding bonds with a tightly priced tap of its March 2017 bond.

Mandates & deal pipeline

• Navarra set to raise €500m on back of 623% OC

  Caja Rural de Navarra has picked joint leads for a roadshow and possible deal. Its announcement late on Wednesday came after Moody’s said that the prospective A3 rated €500m Cédulas was overcollateralised by 623% which will allay negative equity concerns.

Regulatory developments

• Covered bond regulatory uncertainty may benefit ABS

  Regulatory uncertainty about the potential bailing-in of bank debt could strengthen the ABS market, as securitised assets are off balance sheet, covered bond investors said this week at a conference in Frankfurt.

• Morocco to keep it local with new covered bonds

  Morocco’s government is set to establish Africa’s first covered bond regime, as it looks to promote mortgage lending in the face of rising demand for affordable housing, after a decade of growth in the country. However, bond issues are likely to be local currency denominated, limiting the scope for investment from the traditional covered bond buyside, said Standard & Poor’s.

Opinion

• Covered bonds could go tighter still

  Covered bond spreads have been tightening for well over a year, but now core markets are trading close to swaps or through them, there is a sense that performance potential is becoming limited. But this might not be so, The Cover argues. If covered bonds are put on an equal pedestal to sovereign bonds, the bank bid should improve greatly and with supply still sparse, spreads are likely to tighten even further.

RMBS primary news

• Suncorp looks for UK bid for new Aussie dollar RMBS

  Australia’s Suncorp Bank has gone ahead with a A$750m (€581m) new issue from its Apollo RMBS platform in a deal that will target heavy allocation to UK investors.

People moves

• DNB’s Stray retires

  Helge Stray, senior vice president at DNB Boligkreditt’s investor relations and long term funding department, retires from the bank on Friday after 14 years of service.