Credit Agricole launched the second Jumbo issue on the covered bond market this week. It marks the bank's debut in this arena.
The deal priced its seven-year structured paper at 135 basis points over swaps, paying a slight premium over the spreads established by BNP Paribas (five-year at plus110 basis point) earlier this month.
"At the bottom line, French banks are thus the dominant power in the covered bond market currently," said Dresdner Kleinwort analysts in a note today.
Up to now, only German registered Pfandbriefe have successfully placed some larger tranches and the most recent large-volume issues from U.K. bank Nationwide or the Norwegian bank, DnB NOR are likely to have been retained with the purpose of central bank funding.
Despite encouraging signs of a primary market revival from the two jumbo issues in January, covered bonds issuance is off to a slow start. The primary market, said Dresdner, will continue to be mainly driven by state-guaranteed bank bonds, agencies.
"Although demand seems to have somewhat cooled down here as well, the fact that many guaranteed papers have displayed a strong performance during their initial days of secondary trading has left a positive undertone," Dresdner analysts said. "Issuance spreads thus appear sufficiently attractive, and ongoing high volumes could be placed successfully without pricing levels drifting further apart."