The Covered Bond Report

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Awards for Excellence citations: Santander, CRH, Scotiabank

Following the announcement of the winners of The Covered Bond Report Awards for Excellence 2020 earlier this month, we are publishing short citations highlighting the qualities and achievements of the winners that impressed us, starting with overall deal, euro issuer and global issuer of the year.

Overall deal of the year: Banco Santander
€1.25bn 0.01% February 2025 & €1.25bn 0.10% February 2032 cédulas hipotecarias
Bookrunners: Commerzbank, Credit Suisse, ING, Mediobanca, Santander and UniCredit

A €2.5bn dual-tranche cédulas hipotecarias for Banco Santander on 20 February was not only the biggest covered bond benchmark of our 12 month qualification period, but also the best, as reflected in our recognising the Spaniard’s bumper offering as the overall deal of the year. Comprising €1.25bn 0.01% February 2025 and €1.25bn 0.10% February 2032 tranches, the deal impressed in various respects.

The extent of demand uncovered by the five year piece, which was the first deeply negative-yielding peripheral euro benchmark at minus 0.319%, overcame scepticism about such a feat, with its €2.9bn book coming alongside €2.7bn of orders for the 12 year.

Santander also walked away with the tightest pricing from Spain for years – 5bp over mid-swaps for the five year and 12bp over for the 12s – and did so just a fortnight before the market was struck by the impact of the Covid-19 pandemic, blowing away any chance of such levels for the foreseeable future.

Euro issuer: Caisse de Refinancement de l’Habitat (CRH)

After an absence of over six years, Caisse de Refinancement de l’Habitat in October 2019 returned to the covered bond market in style, attracting €2.3bn of demand to a €1bn 10 year deal that bankers said reflected the enduring appeal of the French issuer.

Its prior absence had been due to unintended consequences of regulatory developments spurred by previous crises – which was somewhat ironic, given how resilient CRH had proven during such times.

A €1.25bn seven year on 23 April affirmed the issuer’s standing in today’s crisis, attracting €4.5bn of orders, showing issuance beyond five years to be feasible, and setting the stage for a substantive recovery in spreads – “It gave the market its mojo back,” in the words of a syndicate banker away from the leads.

CRH had in the interim notched up a further success with a €2bn dual-tranche trade in January that attracted peak demand above €6bn, with its achievements securing it our euro issuer of the year accolade.

Global issuer: Bank of Nova Scotia

With something akin to the zeal of the converted, Canadian banks demonstrated covered bonds’ status as a crisis funding instrument at the peak of the pandemic’s impact on the market, even if some continental European bankers balked at their transatlantic counterparts’ willingness to pay the necessary spreads.

Bank of Nova Scotia led the charge, its €1.25bn five year on 11 March being the first euro benchmark to be launched in the wake of historic financial markets volatility. The 20bp spread was an eye-opener, but came on the back of a €1.4bn book and subsequent trades only came wider still. Scotiabank then reopened US dollars on 25 March and on 20 April sold an unprecedented €1.25bn tap – after having in calmer times been the first Canadian to issue in euros in 2020.

In The CBR’s view, these and other successful trades gave Bank of Nova Scotia the edge over a typically strong showing from its compatriots in the running for 2020’s global issuer of the year.

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