Covered Bonds

BN Boligkreditt is to launch its debut euro covered bond, backed by Norwegian residential mortgages, in the new year. The Norwegian issuer is keen to build a long-term presence in the covered bond market to diversify its funding base, but plans to adopt a measured approach.

The “One-to-One” committee of The Cover has reconvened and decided that covered bond reporting should be resumed at 1430 London time today, Tuesday 27th of November.

Yesterday’s decision by the European Covered Bond Council’s to restart interdealer market-making obligations, but for smaller ticket sizes, has met with a mixed reaction, with some market participants saying that it was necessary and others calling it meaningless. However, the covered bond market this week is unquestionably more stable than before last week’s suspension, even if the primary market is still expected to remain closed until the new year.

The Spanish parliament has approved the planned amendment to the Spanish covered bond legislation, which will come into effect the day after being published in the official state bulletin. Meanwhile, The Cover understands that a Eu3.5bn AyT Cédulas Cajas deal expected imminently will be mainly retained for liquidity purposes by the Spanish savings banks and partly privately placed with end investors.

The European Covered Bond Council’s Eight-to-Eight market-makers and issuers committee has recommended that interdealer market-making resume at 2.30pm CET today (Monday). Here is the ECBC’s statement.

In light of unprecedented conditions in the underlying covered bond market, The Cover’s "One-to-One" committee has today unilaterally decided to suspend reporting on the covered bond market until further notice. We acknowledge that this may come as a surprise to some of our clients, who had subscribed to issues of our publication on the basis that it was a highly informative product.

Christoph Anhamm, head of ABS and covered bond research at ABN Amro, has bravely come out with one of the earliest estimates for total jumbo supply in 2008: Eu185bn versus 2006’s record total of Eu179.7bn. He also expects a reversal of recent supply trends, with gross German jumbo issuance of Eu42bn almost equal to Eu43bn of gross supply from the UK and Spain combined.

The spectre of the market being split into “core” and “non-core” jurisdictions with different market-making conventions was raised by one leading covered bond investor today (Friday), following the general suspension of interdealer commitments on Wednesday.