Global Covered Bonds 26H2 Outlook: Summary and charts

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Global Covered Bonds 26H2 Outlook: Summary and charts

C O N F I D E N T I A L

Summary

Supply stays on course; we maintain our FY26 gross EUR benchmark issuance forecast of €175bn (with only

modest country-level tweaks), supported by strong YTD momentum, broadly supportive loan/deposit dynamics, and

pre-funding potential ahead of higher FY27 redemptions. However, ECB-adjusted net supply would be roughly just

€8.5bn in H2, assuming we close H1 with two-thirds of our FY26 forecast completed.

We have accounted for potential funding competitors of covered bonds, but in the grand scheme of things believe

none of senior unsecured, retained issuance, or regulatory-enhanced securitisation as posing any

meaningful impact on covered bond supply.

We expect issuers to continue favouring the 5-7Y tenor, with sub‑5Y and 10Y+ remaining more opportunistic;

curve flattening and long-end RV versus SSAs could temper demand at the back end, while front-end demand is still

underpinned by good yield/RV.

In terms of currency, we expect GBP and USD to remain structurally active funding channels (not just

episodic), helped by supportive technicals/redemptions, competitive cross-currency-adjusted pricing, investor

diversification dynamics, as well as UK regulatory developments (OPRR) that might make sterling comparatively more

attractive for some non-European issuers.

Meanwhile in secondary, despite war-driven volatility, spreads have broadly retraced the widening and held up

YTD with tighter spreads overall compared to the end of 2025. Covered bonds still look positioned defensively

K versus senior unsecured if risk-off returns, and CB‑SSA RV has improved after CB underperformance versus

O

O SSAs in 2026 YTD, especially in the sub‑5Y area.

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