With its second Dutch RMBS of the year, Lloyds Bank has brought the total it has raised in 2026 through securitisations of Dutch mortgages to €1.5bn, leaving very little, if any, to be drummed up in the covered bond market.
This is despite the fact that covered bond funding is generally acknowledged to be cheaper for the issuer than securitisation.
Lloyds’ new €750m RMBS, Candide Financing 2026-2, priced at 45bps over three-month Euribor on Thursday, in from initial price thoughts in the area of 50bps. The triple-A rated notes have an expected weighted-average life of 4.87 years.
Meanwhile, a Lloyds Pfandbrief maturing in 2032 was bid Tuesday (1 September) at an I-spread of around 27bps, which a banker said meant a five-year covered bond should trade at 23bps-24bps, equivalent to about 33bps over three-month Euribor.
Even accounting for a few basis points of new issue concession, that appears to show that Lloyds could raise funding more cheaply by issuing a Pfandbrief than an RMBS.
“They have options,” said the banker. “I don’t think, based on this market, that you would not issue a Pfandbrief. It’s as good as it gets in that market at the moment.”
Diversification
Lloyds Bank...
