Covered Bonds

The UK’s Council of Mortgage Lenders (CML) has joined the line of supplicants at the Bank of England’s door, asking for assistance in funding £90bn of net mortgage lending next year. However, the UK’s Financial Service Authority (FSA) sounded a warning on growth in the mortgage sector, warning that lenders may have to sacrifice growth for liquidity.

Participants in a covered bond panel hosted by BNP Paribas at a Euromoney conference in Paris yesterday focused on the advantages of the private placement market, stressing the attractions for issuers and investors when the public market has been so volatile and market-making so problematic.

The Dutch Ministry of Finance has begun consultation on a Covered Bond Decree, which it hopes will come into effect on July 1, 2008. While the move has been generally welcomed by Dutch banks, it is unclear whether all issuers will reap equal rewards from the new framework.

Moody’s has assigned a triple-A rating to the covered bonds to be issued from Nykredit Realkredit’s covered bond programme. Most of the bonds are secured on residential and commercial properties in Denmark, Sweden and Norway.

Secondary trading in covered bonds has continued to settle down in the past week, with the regions that suffered the most in November mounting a recovery. Optimism for 2008 was further fuelled by asset managers buying in and a growing view that while covered bonds have suffered, they have weathered the storm better than most other kinds of bonds.

With the primary market almost certainly closed until the New Year, the bookies have stopped taking bets on who will top the league tables in 2007. But since less than 1% separates the top two in The Cover’s euro jumbo league table, we have sent it back to Dealogic for a recount.

Dominion Bond Rating Service (DBRS) has assigned a provisional triple-A rating to Bank of Montreal’s covered bond programme. BMO is expected to launch what will only be the second Canadian covered bond in January.

HSH Nordbank has completed the European roadshow for the first euro benchmark ship Pfandbrief and, surprisingly, eschewed vague remarks on a launch date and instead attempted to book a slot in what is expected to be either a busy or a very difficult January for issuance. Meanwhile AIB Mortgage Bank raised Eu175m through a tap of its 2017 issue.