It has been another topsy-turvy month in the covered bond markets. In the first week of June Danske Bank issue a €1.25 billion, five-year mortgage-backed deal at 20 basis points over mid swaps. The Danish bank launched the deal with no pre-sounding, and had it all away within a day. But ECB president Jean-Claude Trichet’s hawkish comments on inflation shortly afterwards brought the market back down to earth, and big hits were taken by many investors, especially those sitting on shorter-dated paper. Except for a few public-sector issues from such names as Dexia and Bayerische Landesbank, the covered bond market has been mostly confined to taps and private placements ever since. It was another month that highlighted the overriding shift...
