Portugal

Banca Santander Totta yesterday (Wednesday) priced a Eu1bn five year mortgage-backed benchmark in the middle of guidance of the 55bp over mid-swaps area. The issuer took heed of a weaker market and did not try to force the pricing, said a syndicate official at one of the leads.

Banco Comercial Português yesterday (Wednesday) priced its first covered bond benchmark since April 2008, but a full new issue pipeline and a strong performance of outstanding Portuguese covered bonds prompted the issuer to forego a roadshow and a market sounding in preparation of its transaction, according to one of the leads.

A series of new issues at aggressive levels in what could be the busiest ever week in the covered bond market has raised fears among investors that the asset class is facing a bubble.

Bilbao Bizkaia Kutxa will this (Tuesday) afternoon price its Eu1bn five year cédulas hipotecarias debut at 58bp over mid-swaps, a “punchy” level that bankers said signalled that pricing expectations might need to be revised tighter. And a tighter level than expected is already being rumoured on the first of several new issues in the pipeline, which includes Dutch, Portuguese and Italian supply.

Bank of Ireland as good as signalled the complete recovery of the covered bond market, in terms of access at least, by launching a Eu1.5bn five year deal that is the first Irish issue in the public markets since June 2007. And while spreads for such issuers may remain at unprecedented levels, the strong rally is nevertheless encouraging many credits to explore possible new issues.

Fitch today (Friday) changed the outlook on the rating of Caixa Geral de Depósitos from stable to negative, following a similar revision of the Republic of Portugal’s outlook yesterday (Thursday).

Fitch yesterday (Monday) revised the outlook on Banco BPI’s rating from stable to negative.

Standard & Poor’s yesterday (Thursday) downgraded Banco Comercial Português from A to A-.

Caixa Económica Montepio Geral priced its inaugural covered bond, a Eu1bn three year mortgage-backed deal, on Friday. It was the first Portuguese jumbo without a triple-A rating from Moody’s, but the issuer told The Cover that investors did not seem overly concerned about this.

Caixa Económica Montepio Geral will today (Friday) price its inaugural covered bond issue, a Eu1bn three year mortgage-backed deal rated Aa1/AAA.

Several covered bond issuers are understood to be circling the market, hoping to pick off tighter levels. However, some are encountering resistance from investors, even if the European Central Bank’s purchase programme continues to underpin the market.

Further new issuance is on the cards for this week, despite the beginning of the European summer holiday season starting to have an impact on the pace of supply. Meanwhile, the European Central Bank has reported a further Eu43m of purchases under its programme and president Jean-Claude Trichet gave the asset class another ringing endorsement.