Portugal

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.

Banco Espírito Santo opened books on a new short dated mortgage backed transaction this (Wednesday) morning, apparently refuting suggestions that conditions had turned against a second new benchmark this week. Bankers with outstanding mandates from Italy and Portugal admitted that this turn of events could cause them to readjust their plans, but only if the issuance window can be held open in the face of pressure from the wider financial markets.

*Excludes German, French, Spanish and Nordic issuance.

Santander Totta priced its debut covered bond this (Wednesday) morning, a Eu1bn three deal that was regarded as correctly pitched in terms of pricing, and reinforced the stability of re-offer levels in the primary market. (Updated to include issuer feedback.)

Portugal’s Santander Totta opened books this (Tuesday) morning on its debut covered bond, a Eu1bn three year deal. The manner of its execution stands in marked contrast to the new issues of the last fortnight, but the tactic appeared to have paid off with the deal fully covered by midday in London.

A new issue from Banco Santander Totta as early as tomorrow (Tuesday), after today’s continental European holiday, could provide further clues as to whether the widening trend in the primary market evident since last September has finally come to an end.

Moody’s today (Tuesday) assigned a provisional triple-A rating to Banco Santander Totta’s covered bond programme. BNP Paribas, Morgan Stanley and UniCredit were mandated as leads back in December, but one banker suggested that first issue could emerge soon.

Portugal’s Millennium BCP’s new Eu1bn two year covered bond may have caused consternation when it was priced at 40bp over mid-swaps yesterday (Thursday), but the lead managers staunchly stuck by their guns to defend the level it came at, and some outside the deal were coming round to their point of view this (Friday) morning.