Covered Bonds

Danske Bank has closed the books for the first euro denominated Danish jumbo covered bond, a two year deal backed by non-Danish mortgages marketed at guidance of the mid-swaps plus 10bp area.

Click here for the April 4, 2008 covered bond pipeline. (Opens pdf file.)

Spanish banks have been in action in the senior market this week, giving the lie to the belief that the country’s financial institutions are struggling to find alternative funding sources to central bank liquidity facilities. However, the covered bond market appears as firmly closed as ever and analysts are continuing to slash their forecasts for cédulas supply this year.

Like Woody Allen hungrily eyeing the party in an adjacent train in Stardust Memories, covered bond bankers were left feeling like they’d brought the wrong ticket this week, as the senior unsecured market revelled in issuers’ willingness to print deals at levels that tempted investors to throw caution to the wind. But one analyst warned that issuers who adopted a similarly relaxed attitude to covered bond pricing could be seen as party-poopers.

Landesbank Baden-Württemberg is hiring Stephane Bataille from Morgan Stanley as its new head of covered bonds. Bataille, who is expected to join in June and be based in Stuttgart, will report to Jörg Huber, head of debt capital markets at LBBW.

The Australian Financial Markets Association has increased pressure on the Australian Prudential Regulatory Authority (APRA) to change its opposition to covered bonds, asking it to review its prohibition of the funding tool in a letter last month.

Moody’s has downgraded the Hungarian Land Credit & Mortgage Bank’s (FHB) mortgage covered bonds from Aa2 to Aa3 following its privatisation. In response, FHB has signed a contract to guarantee a certain level of over-collateralisation above the statutory requirement.