Global Covered Bond Update: Triple Treat from Newcomers, and the ECB Updates Haircuts

Covered bond issuance has slowed after the post-summer rush, but primary activity remains resilient due to three debut issuers (Fairstone Bank from Canada, Evangelische Bank from Germany, and Luxembourg's BCEE/Spuerkeess). Spuerkeess is notable as the first 'true' Luxembourgish issuer and the first EU CBD/CRR-compliant mortgage covered bond from the country, reviving issuance since 2020. Spuerkeess is a state-owned Luxembourg universal bank (€62bn balance sheet) with high liquidity (LCR ~207%, NSFR ~135%) and a €7.5bn covered bond programme expected to be top-rated, backed by 100% Luxembourgish residential mortgages with low indexed LTV (~40%). The inaugural 7Y Green deal priced from MS+38 guidance to MS+31, offering pickup vs. Dutch/Belgian peers and potential to outperform as liquidity builds. Fairstone Bank is an alternative Canadian lender (C$32.5bn assets) focused on near-prime borrowers;