Portugal

The government guaranteed bank debt market was the juncture of two waves of negative sentiment in the markets this week, as downgrades hit the sovereign market and financial institutions suffered renewed pressure.

Standard & Poor’s yesterday (Wednesday) downgraded the ratings of Caixa Geral de Depósitos and Banco Santander Totta after cutting the Republic of Portugal’s rating from AA- to A+.

Standard & Poor’s today (Wednesday) placed the ratings of Caixa Geral de Depósitos and Banco Santander Totta on CreditWatch with negative implications after taking the same action on Portugal’s rating.

HSH Nordbank today (Monday) opened books on a three year SoFFin-guaranteed benchmark deal at 0900 London time with guidance of 30bp over mid-swaps, which is where Commerzbank’s inaugural government-backed transaction was priced on Friday.

Caixa Geral de Depósitos and LeasePlan are pricing the first government guaranteed deals from Portugal and the Netherlands, respectively, this (Friday) afternoon. However, the first guaranteed deal from Germany, for HSH Nordbank, is not expected to be rushed to market.

Issuers of Portugese covered bonds have worked hard to market their product internationally. An important aspect of the investor education has been to differentiate the product from Spanish cédulas, crucial given that Spain’s housing market has deteriorated so much. In this special report from EuroWeek, Philip Moore analyses an oft-misunderstood product that shows much promise.

Caixa Geral de Depósitos tapped its Eu2bn December 2016 issue for Eu150m through Lehman Brothers on Friday in its first public covered bond issuance in the benchmark market this year.

In brief: Banco BPI has set up a Eu2bn public sector covered bond programme under Portuguese law and issued a Eu150m transaction, the first obrigações sobre o sector público.

Portugal’s Banco BPI is set to price its debut two year covered bond after breaching the targeted Eu1bn level this (Tuesday) morning. The impact of holidays had slowed the deal’s progress and the re-offer was set at the wide end of guidance.

Banco BPI opened books on its first covered bond this (Monday) morning, surprising many market participants who had expected the weak tone in the credit markets and summer holidays to dampen issuance. However, even more supply could emerge, with a public sector Pfandbrief being soft-sounded.

Banco Espírito Santo has enjoyed a turbulent first year in the covered bond market, with praise for its new Eu1.25bn two year for keeping the primary market open contrasting with the criticism it received after its debut Eu1.25bn three year in January pushed secondary spreads wider. The Cover spoke to Paul Ferreira, head of funding at BES, about its new issue and future plans.

Banco Espírito Santo priced only its second covered this (Thursday) morning and the final size was enough to make it the largest covered bond in over a month. Those outside the deal said it was a pleasant surprise that two benchmarks could be priced during a bumpy week.