1. Ted Lord of Barclays Capital Offers News On Covered Bonds
From Bloomberg
„Ultra Safe‟ Covered Bonds Buoy European Corporate Debt Sales
By Ben Martin and Esteban Duarte
Jan. 7 (Bloomberg) -- Corporate debt issuance in Europe was dominated this week by
record sales of covered bonds as investor concern about Europe‟s debt woes spurred
demand for the relative safety of the top-rated securities.
Banks issued 18.1 billion euros ($23.5 billion) of the loan-backed notes, surpassing the
previous record of 17.1 billion euros raised in January 2006, according to data compiled by
Bloomberg. Sales of covered bonds were more than double the
8.5 billion euros of unsecured debt European companies raised this week.
Covered bonds typically get the highest ratings because the notes are backed by
mortgages or state-sector loans and a guarantee by the issuer. Sales of the securities soared
as speculation euro-area governments including Belgium, Portugal and Ireland will
struggle to fund their budget deficits drove the cost of insuring European sovereign debt to
a record.
“Issuers have been attentive to investors‟ needs, who favor the ultra-safe covered bond
for investment with the current economic background,” said Ted Lord, head of European
covered bonds at Barclays Capital. “There are several cases in their history where
sovereigns have defaulted on their debt and covered bonds have been paid in full and on
time.”
The extra yield investors demand to hold covered bonds instead of sovereign debt fell 1
basis point this week to 182 on Jan. 6, according to Bank of America Merrill Lynch index
data.
That‟s up from 85 basis points a year earlier, the data show.

2. BNP, DnB NOR
Lenders from France‟s BNP Paribas SA to DnB NOR ASA in Oslo have issued covered
bonds this week. BNP Paribas Home Loan Covered Bonds sold 1.75 billion euros of 10-year
bonds, while DnB NOR Boligkreditt A/S, a unit of the Nordic region‟s second- largest
bank, issued 2 billion euros of the debt.
“For the strongest names, covered bonds continue to be the cheapest source of funding,
and for weak borrowers it‟s in many cases the only source of funding as investors do not
feel comfortable lending to them on an unsecured basis,” said Jose Mosquera, a fund
manager at Breogan Global Financial Fund in Madrid.
In the week‟s unsecured bond sales, Volkswagen Leasing GmbH sold 1.25 billion euros
of notes due 2015, while RCI Banque SA, the financing arm of carmaker Renault SA,
issued 750 million euros of three-year bonds.