In 2010 Danske Markets has now been joint book runner on three covered bond benchmarks from leading international banks, namely BNP Paribas, HSBC and Barclays.
‘The covered bond market has seen unprecedented pace of new issues here at the beginning of 2010 with volumes already exceeding that of the entire first quarter of 2009. This indicates increasing investor interest in the asset class and an unfreezing covered bond market,’ says Bo Wetterstein, Head of DCM.
BNP Paribas
This year is set to be another testing year for the covered bond product. The market therefore needed a kick-off by a national champion.
‘BNP Paribas filled this demand by successfully opening the covered bond market with this 7 year issue, its longest benchmark to date,’ says Per Hoeg Jensen VP, DCM, continuing:
‘This issue, being the sixth issue from BNP with Danske Markets involved as book runner, came against the backdrop of concerns over new covered bond rating measurements. However, BNP Paribas showed its strong commitment to the product by publicly stating that it will transfer additional collateral to the cover pool in order to maintain its AAA-ratings’.
The order books opened on 5 January and attracted over EUR 2bn of investor demand within a couple of hours, resulting in a successful EUR 1.5bn EURO covered bond issue for BNP Paribas.
Barclays
Our second deal of 2010 was for Barclays Bank plc who opened the year for UK covered bonds with a 5-year issue for an amount of EUR 1.5 bn. Despite the fierce competition for investors’ interest - with four issues coming to the market simultaneously - the deal managed to attract EUR2.25bn of interest. This was Barclays Bank’s second covered bond issue after the debt issue in September 2009 – and the second time Danske Markets was appointed book runner.
HSBC
The third transaction represents the inaugural issue from HSBC France Covered Bond programme, backed by only French prime residential mortgage and Credit Logement guaranteed loans. Some 130 investors submitted orders, allowing HSBC to print a EUR1.5bn 7 year issue amid EUR 20bn of new issues already in the market.
‘The deal highlights that despite fierce competitive supply a successful transaction is still obtainable for an inaugural issuer, given the proper execution strategy’, explains Bo Wetterstein. “And we are of course very pleased to have been rewarded the trust of all these major international banks by delivering investor diversity as well as strong secondary trading support into their transactions”.