Covered Bonds

Barclays is thought to be close to entering the covered bond market as an issuer, having incorporated Barclays Covered Bonds Limited Liability Partnership yesterday (Tuesday).

As a follow-up to yesterday's article on comments by Sheila Bair, chairman of the Federal Deposit Insurance Corporation, today we have posted clips of her speech on The Cover.

Panellists at the II Covered Bond Summit in New York on Monday including representatives of Bank of America and Washington Mutual were bullish about the potential for covered bonds to take hold among US financial institutions given the increased spread between covered bonds and other funding instruments that has resulted from the recent turmoil.

Panellists at the II Covered Bond Summit in New York on Monday including Washington Mutual and Bank of America were bullish about the potential for covered bonds to take hold among US financial institutions given the increased spread between covered bonds and other funding instruments that has resulted from the recent turmoil.

The launch of the first Spanish covered bond since before the summer got closer today (Tuesday) with the announcement that Barclays Capital, Commerzbank, LBBW and Natixis have been mandated for IM Cédulas 11, which will be a short dated benchmark issue and is due in mid-November. Crédit Mutuel-CIC of France has also mandated a new issue.

Joshua Friedberg, director and portfolio manager at BlackRock, painted a bleak picture of the future for covered bonds in the US yesterday (Monday) at the II Covered Bond Summit in New York. He said that rather than behave as a rates product as they had been marketed to US investors, covered bonds had suffered from illiquidity in the recent market turmoil and should pay a liquidity premium that might make 144A issuance prohibitively expensive for European issuers.

Royal Bank of Canada (RBC) priced its debut Eu2bn five year covered bond at 10bp over mid-swaps this (Tuesday) morning, at the tight end of the 11bp over mid-swaps area guidance.

Sheila Bair, FDIC chairman, gives the regulator's take on the covered bond market.

Fitch Ratings delivered an optimistic assessment of the performance of the leading Portugese banks in the first half of 2007. The report, published on Friday, expects the banks to maintain this strong performance despite recent difficult market conditions.

Berlin Hannover Hypothekenbank (BHH) is to tap its Eub1bn 4.125% public sector Pfandbrief due 28 March 2017, to the tune of Eu125m.

Sheila Bair, FDIC chairman, takes further questions, beginning with Louis Hagen of the Association of German Pfandbrief Banks.