It has been an interesting year for covered bonds. While few asset classes outside commodities have flourished in the current market conditions, covered bonds on aggregate have enjoyed relatively good performance. This has ranged from being among the least bad performers in the credit universe in some of the newer covered bonds markets – such as Spain and the UK – to delivering very good returns in absolute terms in some of the more established markets – like Germany and France. This has attracted considerable new attention to the sector from...Read more
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The ECBC is the chief cheerleader for the covered bonds industry in Europe, its spiritual home, but is also working hard to stimulate activity in countries markets where covered bonds have not traditionally been found. It has certainly been a busy year for the association, which has had to wrestle with a number of issues affecting the market, as Solomon Teague found out.
In a difficult 12 months for global financial markets, covered bonds have fared relatively well, attracting a range of new investors and issuers at a time when many other markets remain closed. But covered bonds have had to adjust to the new reality just like the other asset classes. Solomon Teague reports.
The German jumbo Pfandbrief sector has remained resilient in the face of a widening in spreads and difficult market conditions, with volumes holding up as those of covered bonds in less established jurisdictions plummeted. Hardeep Dhillon reports.
The implementation of a covered bond law in the UK in March has set the scene for the market to flourish. But without a fundamental change in investors’ perception of the underlying UK mortgage market, issuers are reluctant to test the waters yet. Han-Nee Tay reports.
CRH is focused on raising its profile in the international investment community following the successful launch of its covered bond in February. With borrowing needs increasing in France, the credit institution says it is planning more roadshows as it mulls more jumbos, writes Han-Nee Tay.
Like all mortgage-related asset classes, Spanish covered bonds – in particular the cedulas hipotecarias – have endured a difficult first half of this year, but investor interest in recent deals suggests the market may be regaining some ground, despite steep premiums for issuers. Yet experts warn it will be some time before it regains its former luster. Savita Iyer reports.
As a result of the relatively contained spreads in covered bonds, some analysts have recommended buying RMBS instead of covered bonds for certain jurisdictions. But is this like comparing apples and pears? William Thornhill reports.
After a turbulent six months of discontent among covered bond participants, a consensus on the future of market making has yet to be reached. Various regulatory bodies have attempted to resolve this impasse but it seems the market is tentatively finding its own solution through the re-pricing of debt in the primary market. Mike Winfield reports.
Switzerland is unique in its covered bond market, having only two institutions permitted to issue such instruments. Through this duopoly, Swiss financial institutions can access funding, seemingly regardless of market conditions, with spreads suffering only minor corrections compared to the rest of Europe. Rachelle Horn reports.
Evolution has been painfully slow in the Italian covered bond market since the Bank of Italy gave the green light to secondary regulations issued by the Ministry of Economy in May 2007. Progress has finally been made however, with the inaugural issue off the new framework expected the coming weeks. Andrew Perrin reports.
While the Italian covered market has been conspicuous by its absence, it is likely to establish itself some time before its Greek neighbour – the only other “large” Eurozone jurisdiction that is still to get of the ground. Greece released its primary legislation for covered bonds towards the end of last summer. While already approved by Parliament and containing many necessary facets that indicate a solid legislative framework, many details are still fairly general and will be left to secondary legislation which will then have to be signed...
With its innate ability to offer a relatively cheap cost of funding, more banks are now looking to establish a covered bond programme. However, with some covered bond markets essentially shut for the past six months, and 2008 supply predictions slashed accordingly, can covered bonds live up to the banks hopes and expectations? Rachelle Horn investigates.
The collapse of established market making rules made a strong case for enhanced research capabilities among investors to adequately assess issuer and product quality across multiple jurisdictions. Though buyers’ focus is more on issuers right now, in the long term, it will shift to the quality of the collateral pool. Malini Menon reports.
The US covered bond market was shelved before it really got off the ground. Although policy officials and regulators have endorsed the product, investors' stamp of approval is still needed, as Andrew Stein reports.
As emerging economies are going through the market transition, more financial instruments are being implemented and improved. Covered bonds are no exception with Azerbaijan, Brazil and Turkey already one step ahead of Croatia and Mexico, which have also expressed a keen interest. Azerbaijan is to become the first CIS country to issue covered bonds, making it possible for Azeri banks to securitise their accumulated mortgage portfolios. The National Bank of Azerbaijan (NBA) is drafting a bill on covered bonds under the guidance of the...