The lower demand has also made itself felt in the volumes of secured instruments issued, although markets have, since the crisis, displayed a preference for secured funding. Covered bond issuance volumes declined given an ample liquidity supply by the Eurosystem and a tendency towards balance-sheet deleveraging.
In the first seven months of 2013, the volume of newly issued covered bonds denominated in euro decreased by 38%. Issuance volume has therefore reached its lowest level since 2009. Given that the volume of matured Covered bonds significantly exceeds issues, the resulting excess demand has narrowed covered bond spreads against Bunds.