Covered Bonds

Bradford & Bingley has dipped its toe back into the covered bond market this week, raising Eu450m through two short dated floating rate notes at prices reflecting the post-Northern Rock market.

Bank of Scotland, formerly HBOS, has reopened the UK covered bond sector with its Eu2bn seven year transaction, winning plaudits for once again taking a leadership position in the market.

Turkey’s Capital Markets Board published the Bylaw on Principles Regarding İTMK (Turkish covered bonds) on 5 October, marking another regulatory step on the journey towards the first covered bond from the country.

Millennium BCP has finally priced its Eu1bn seven year Portuguese covered bond at 11bp over mid-swaps, the middle of spread guidance.

Spread guidance of 16bp over mid-swaps for Bank of Scotland’s (formerly HBOS Treasury Services) new seven year benchmark has been well received in the first UK issue since the Northern Rock crisis struck after Nationwide had impeded HBOS’s previous attempt to reopen the sector.

The sharp increase in spread differentiation between covered bond jurisdictions resulting from the credit market turmoil has made issuers more wary of being tarred by analysts with the same brush as their neighbours.

Millennium BCP will close the books for its Eu1bn seven year issue at the end of today (Tuesday) and price it tomorrow after what is being seen as a slow bookbuilding process.

Fitch Ratings has given a positive review of the performance of major Italian banks in the first half of 2007 and, most importantly ahead of their entry into the covered bond market in 2008, a clean bill of health to their mortgage businesses.

Bank of Scotland, formerly HBOS, is expected to issue a seven year euro benchmark covered bond in the coming days.