Spain continued to dominate covered bond supply, taking 43% of last year's total of €130bn. This year, Spanish issuers of cedulas are likely to bring €60bn to market, more than double their next biggest rival, German pfandbrief. While growth is likely to slow from the blistering 25%-30% levels seen in recent years, at 15%-20% from 2006 onwards, Spain is likely to remain a key jurisdiction alongside Germany. Despite the unseemly downfall of Germany's AHBR, the episode graphically illustrated the inherent strength of pfandbriefe. Although the...Read more
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Spanish issuers seem to be developing an uncanny knack of confounding sceptics who have been forecasting that the market for cedulas hipotecarias is about to buckle under the weight of new supply. But they are also looking at alternative investor bases and currencies.
No sooner had the long-awaited Pfandbrief Act been implemented in Germany than the new market infrastructure received its first test of robustness with concern over the future of AHBR. Both survived, but the knock-on effects will be felt for some time to come. Mark Pelham reports.
Italian secondary covered bond legislation should have been approved by now. But as discussions between the Ministry of Finance, Bank of Italy and various other parties drag on, a degree of disillusion has set in. The Bank of Italy's decision to limit issuance has compounded the negativity, as William Thornhill reports.
A French issuer caught everyone by surprise with an ultra long-dated issue earlier this year. Yet the French covered bond market's well-founded reputation for stability is what is likely to sustain it going forward. Mark Pelham reports.
The success of the Icelandic Kaupthing transaction and investors’ very positive response to the handful of deals that have emerged from Finland are unlikely to have gone unnoticed elsewhere in the Nordic region, where the groundwork has also been prepared for issuance of covered bonds.
Emerging European covered bond issuance has, to date, been relatively insignificant but as these economies develop an infrastructure to serve their mortgage markets, it seems likely that a vibrant real estate sector will transpire with volumes likely to increase significantly. A broad sweep across these juridictions reveals a varied degree of preparedness. William Thornhill outlines some of the major themes.
Far from tainting the market, structured covered bonds have provided a lifeline to the sector, renewing its vitality and spurring growth. The product continues to make headlines with a number of new UK issuers lining up, and after ABN AMRO came with an updated Dutch structure last year, several US borrowers are thought to have mandated European banks to work on a domestic structure. William Thornhill reports.
Louis Hagen, chairman of the European Covered Bond Council (ECBC), talks to William Thornhill about its achievements, its raison d’etre and his own hopes and fears for the sector.
The flood of Spanish cedulas this year has at times pushed investor demand to its limits. This was especially evident at the long end, where around 75% of supply has been targeted in a market in which total volumes were up by around 30% in Q1. But Caixa Catalunya has underlined that there is still room for first-time Spanish borrowers that can offer some diversity. Andrew Perrin reports.
Santander Consumer Finance opened a new chapter in its international borrowing in March, when it utilised the Spanish covered bond market for the first time. The €1.2bn 10-year cedulas hipotecarias issue, launched following a four-day European roadshow, commanded a very respectable €2.8bn of demand that paved the way for pricing at the tighter end of mid swaps plus 8bp-9bp guidance. Andrew Perrin reports.
German mortgage lender Aareal Bank completed its inaugural jumbo pfandbrief issue in January 2006. Despite tight pricing, the bank found good demand for its debut, as investors flocked into the new name to take advantage of the internationally diversified portfolio underlying the bonds. Helen Bartholomew reports.
AIB Mortgage Bank was the first borrower in the covered bond market to opt for a dual-tranche format for its debut issue, which at €3.5bn, also represented the largest issue size for a first-time borrower. The bank is waiting for the dust to settle after the two deals that it priced in March before arranging a likely return to the market later this year. Malini Menon reports.