Covered bond market update

Erste Bank Research Team Erste Bank

The covered bond primary market kept its strong pace in 1HY 2026, reaching an issuance volume of EUR 121.7bn, up 21.2% y/y. Drivers were large benchmark and especially dual-tranche transactions. CEE issuers grew by 94%, while ESG issuance gained clear momentum after a slow start. Our team sticks to its full-year forecast of EUR 180-190bn.

The swap spread rally ended in Q1 2026 and shifted into a sideways move. Despite the Iran war, asset swap spreads moved only slightly, and the spread differential to German Bunds is near its long-term low. Risk premia are expected to stay stable around 25bp in the coming months, while inflation uncertainty and high funding needs could trigger a moderate widening to up to 30bp.

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Erste Bank Research Team

Erste Bank

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