Covered Bonds
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Luxembourg’s covered bond framework is expected to be updated to introduce a new asset class of “movable objects” lettres de gage, including ships and aircraft, according to the country’s issuers. Under a parliamentary bill, certain ABS will also become eligible for cover pools, a minimum overcollateralisation level of 102% will be introduced, and the maximum loan-to-value ratio of residential mortgages will be increased from 60% to 80%.
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Caisse de Refinancement de l’Habitat is to return to the market in benchmark size at both the long and short end in the near future, with the covered bond market continuing to work its way through its list of reliable issuers, following Sparebank 1 opening books today and the German public sector issuance of the last fortnight.
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With German public sector issuers returning in style this week, mortgage Pfandbrief and Scandinavian issuers are being tipped as likely successors in a market where the well stocked pipeline is as much a list of those that can’t access the market as a guide to who will be next. Indeed the problem for the primary market is that it looks like those that could issue won’t, and those that would issue can’t.
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Depfa priced the largest benchmark for Deutsche Pfandbriefbank in seven years yesterday (Wednesday) afternoon, a Eu2bn deal that is also the German unit’s first benchmark since June 2005 and the largest public sector Pfandbrief issue so far this year.
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Canada’s credit unions are exploring ways of emulating Spain’s savings banks by issuing pooled covered bonds, said Gilbert Ménard, managing director, capital division, at the Office of the Superintendent of Financial Institutions last Friday. Indeed Charles Milne, associate vice president, treasury and funding services at Credit Union Central of British Columbia (CUCBC), has dubbed covered bonds “the new black” and is eyeing issuance in the third quarter.
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ING Bank NV has mandated ABN Amro, Barclays Capital, HSBC and ING Wholesale Banking as joint leads for its inaugural covered bond, which will be launched after a European roadshow starting in the week of March 3. Berlin-Hannoversche Hypothekenbank is also aiming to launch a three year mortgage Pfandbrief that week.