Few markets managed to come out of the crisis in one piece. But for covered bonds, the past few years have been different, with the asset class coming out bigger and more enhanced. Once considered a niche – even, some might argue, boring – product, the decline of other parts of the bond market have suddenly cast it into the limelight, bringing a variety of new participants into its orbit.  Nature abhors a vacuum. And when the illusion that sovereign debt – any sovereign debt – is risk free was s

To view the digital version of this report, please click here. US banks are among the world’s largest users of capital market funding. But in the world of covered bonds they are minnows, accounting for less than 1% of a €2.4trn pie. To date, only two US lenders have offered covered bonds. Washington Mutual made its debut in 2006, and Bank of America followed shortly afterwards in 2007. A domestic asset class has since failed to gain traction because there is no legal framework in the US comparab

To view the digital version of this report, please click here. Since the start of 2011 the covered bond market has seen a flood of €130bn of issuance. The deluge has left some bankers wondering whether we are currently witnessing the replacement of senior unsecured funding by an improved, reinvigorated covered bonds market. Covered bonds have been shown in a very positive light this year. It helped that they are excluded from the contentious European Commission’s consultation paper that could re

To view the digital version of this report, please click here. A year has gone by since the ECB bought its final covered bond through its €60bn covered bond purchase programme. Year to date in 2011, total issuance volume now stands at €130bn – an impressive total. So how important has the ECB’s programme been in delivering this result? The very fact the ECB launched a covered bond programme in 2009 was a glowing endorsement of the market, explicitly singling it out as especially significant to t

To view the digital version of this report, please click here. Intesa Sanpaolo and Axa Bank Europe opened the market for European RMBS-backed covered bonds late last autumn. Since then, a few follow-on deals have been launched, and more are expected. The transactions highlight not only increasing investor comfort with the covered bond structure, but also the limited asset pools that investors are willing to look at under these programs. They show that investors are indeed willing to look at slig

To view the digital version of this report, please click here. To use or not to use, that is the question on the minds of many covered bond market participants pondering the activities of Standard & Poor’s, as they await final details of its new covered bond counterparty criteria. The ratings agency is currently digesting market feedback on the changes, the most significant of which are credit enhancements linked to the exposure of any single swap counterparty and also the number of counterp

To view the digital version of this report, please click here. The Nordic region is expected to see strong domestic market issuance this year, with upwards of €25bn of euro-denominated transactions, of which roughly €15bn has already been placed with investors. UniCredit published its predictions for benchmark-sized transactions at the end of 2010. It projected Sweden will lead the fray with €12bn of issuance this year, up from €8.5bn in 2010. Norway is down for €10bn versus last year’s €8.9bn,

To view the digital version of this report, please click here. The new faces in the market have not only been on the issuer side. Covered bonds have attracted a range of new investors, too, with rates investors, for example, flocking to covered bonds as they shun peripheral sovereign debt. There is also evidence that central banks are investing more in covered bonds in the three to five-year part of the curve. “Credit investors are coming to the asset class because they are concerned about bail-

To view the digital version of this report, please click here. Despite a glut of issuance, first-time issuers have been relatively rare, particularly in the face of ongoing eurozone debt worries. Investors are not interested in snapping up new names but are more focused buying covered bonds from established names in established markets.  Safety is the name of the game The main supply of late has come from core European markets rather than the periphery, and the emphasis is on safety and establis

To view the digital version of this report, please click here. Covered bonds have been the darling of the Spanish banking system in recent years, offering cheap finance in a country with a booming housing and mortgage market. All that changed with the onset of the financial crisis across southern Europe. Debt problems in Europe have cast a pall over the Iberian Peninsula and closed the door on capital markets. In recent weeks there has been evidence of a shift in sentiment, with signs that Spain

To view the digital version of this report, please click here. Australia is on the brink of finalising its guidelines for its covered bonds market, and intends the text to form the basis of legislation by the third quarter. The discussion period on the issue closed on April 22, with around 10 submissions made during the consultation period offering various suggested improvements to the guidelines. “The current draft legislation meets most requirements except that some technical issues,” said Chr