H2 26 Covered Bond Outlook

Barclays maintains a constructive outlook on the covered bond market for H2 2026, anticipating manageable supply levels offset by significant redemptions. Spreads are expected to remain resilient despite potential moderate widening.

Key Takeaways

• 1.Expect up to €50bn of EUR benchmark covered bond supply in H2 2026, manageable due to high redemptions.
• 2.EUR covered bond spreads are expected to remain resilient, potentially trading 2-3bp wider in H2 2026.
• 3.Canadian covered bonds show robust demand despite record issuance, while French covered bonds are viewed as a defensive 'hide' for volatility.

Table of Contents

• H2 26 covered bond outlook
• Supply on track for €170-175bn in 2026
• Additional €45-50bn expected until YE
• High covered bond redemptions in H2 26 and Q1 27
• Well functioning market but investors are becoming more selective
• Spreads expected to be well supported by technicals
• Regulatory developments
• Recent publications

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