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Covered Bonds Roundtable 2007

As the covered bond market continued on its relentless march around the globe in the first half of 2007 and more and more jurisdictions were converted to the cause, one of the major selling points used by the asset class’s most zealous evangelists was that it was, in effect, a proxy rates product rather than part of the credit world. While the benign conditions early in the year did not offer the kind of backdrop against which this assertion could easily be tested, the mid-summer new issuance stagnation and the liquidity crisis sparked by US...Read more

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Covered Bonds Roundtable 2007: Participants

Christian Reusch - UniCredit Christian Reusch is managing director and global head of syndicate at UniCredit Group’s Markets & Investment Banking Division. He joined HVB in 1999 to help restructure the syndicate desk and support origination with a special focus on the covered bond business. In 2006 he took over responsibility for the corporate/high-yield and structured finance businesses. Prior to his syndicate position at HVB, he worked in various functions in the treasury of Wuerttembergische Hypothekenbank (now Hypo Real Estate Bank...

Covered Bonds Roundtable 2007: Part 1

IFR: The recent market turmoil resulted in a marked loss of liquidity in secondary covered bonds. In light of this, have covered bond participants been wrong to market the asset class as a liquid rates proxy? Christian Reusch (UniCredit): I think that covered bonds are a liquid product and, even during the recent volatility, they have been as liquid as many other instruments. Market participants have adapted to the turmoil by widening the range of bid/offer spreads in market-making to ensure sufficient liquidity. We have seen in the past that...

Covered Bonds Roundtable 2007: Part 2

IFR: From an issuer’s perspective, how important is it to you that traders continue to make markets in your bonds? Thor Tellefsen: What we have been hearing all the time from investors is, of course, that market-making is extremely important. I think that, going forward, as an issuer it is important when we are choosing a lead management group that we are certain that they are willing and able to fulfill their market-making commitment for as long as it is possible. We do, of course, understand that when there is no swap quoting, it is...

Covered Bonds Roundtable 2007: Part 3

IFR: And where do DnB NOR bonds trade compared with other jurisdictions? Achim Linsenmaier: Basically, DnB NOR covered bonds were issued and are trading still more or less around the level of mid-swaps minus 3.5bp. That is very close to the level where German bonds are trading, so this clearly underlines what Thor said, that this is definitely one of the assets where people feel very comfortable in terms of spread, especially this environment. IFR: When will we see DnB NOR back in the market with a jumbo? Thor Tellefsen: We have previously...