DZ Bank

Covered bond supply surged to its highest levels in seven months this week, as issuers scrambled to raise funding before the end of the year and costs soar even further.

Caja Rural Navarra pushed ahead with its seven year Cédulas Hipotecarias backed by environmental and social governance assets on Wednesday, even though it knew the market was likely to be unreceptive.

German healthcare group Fresenius launched a €400m Schuldschein on Friday and had already received commitments in excess of the launch size by Monday afternoon, as investors lapped up the favoured credit.

BHP Billiton’s partnership with the IFC for the world’s first ‘forests’ bond has inspired others to look at similar projects.

As the end of 2016 approaches, borrowers are turning to the green market for their remaining funding, with a pair of SSA borrowers returning to the syndicated market for socially responsible investment products on Thursday.

Public sector borrowers have hardly skipped a beat in the wake of Donald Trump’s election victory, getting back on track with an NRW.Bank green bond mandate hitting screens on Wednesday.

Caja Rural Navarra is planning the first green covered bond of the year. It follows a trio of covered bonds issued by Australian banks and the first transaction to be issued from Nordea in more than a year.

Caja Rural Navarra has mandated leads to roadshow an environmental and social governance (ESG) Cédulas Hipotecarias with an intermediate maturity.

Norddeutsche Landesbank (NordLB) and Deutsche Genossenschafts-Hypothekenbank (DG Hyp) issued tightly priced German Pfandbriefe that benefitted from a rise in yields this week.

Crédit Agricole issed a rare €500m 10 year public sector Obligations Foncières this week that was priced at the tightest spread for a French covered bond in more than a year and was the most highly subscribed in more than 18 months.

The recent rise in yields has provided covered bond borrowers from the most expensive jurisdictions like Germany an opportunity to diversify away from the overpopulated 10 year. DG Hyp was the latest issuer to take advantage of this development with its €500m long eight year which was issued on Tuesday.

NordLB issued a €750m public sector covered bond on Monday which, like the previous German 10 year from Commerzbank, was only just subscribed. The tight initial spread discouraged order inflation and stimulated high quality orders, allowing the borrower to issue more than was initially planned.