Covered Bonds

Redemption day is not a day of judgment for covered bond issuers, but a regular date in their diaries. Net flows in the months leading to January 2008 will, however, decide how 2007, which began with such high hopes and forecasts for covered bonds, is judged.

Nykredit today (Thursday) announced that it will begin issuing new Danish covered bonds, Særligt Dækkede Obligationer (SDOs), from the end of December to finance the mortgage lending of Nykredit and subsidiary Totalkredit.

Congratulations to The Cover reader who appears to have cracked our voting system this morning! Within around 10 minutes Barclays Capital raced from having zero to 94% of the vote in our poll on who will finish top of the league tables in 2007.

Dexia LdG Banque launched the first issues off its new Eu25bn MTN programme last Friday (September 28), two Eu675m floating rate notes backed by public sector collateral.

Fitch has revised its rating outlook for HSBC Holdings from positive to stable, reflecting the bank’s vulnerability to the fallout from the US subprime mortgage market. HSBC’s long term issuer default rating of double-A is now unlikely to change over the next one to two years.

Thomas Ahman, head of funding and liquidity at Stadshypotek in Stockholm, stressed today (Wednesday) that the issuer is in no hurry to tap the euro market and has stepped up its activity domestically.

Ralf Grossmann started as head of covered bond origination at Société Générale on Monday as the French bank seeks to reinforce its position in the market and push into Germany, its weak point.

Landesbank Rheinland-Pfalz’s Eu500m five year public sector Pfandbrief was the only new issue today, with the market quiet ahead of tomorrow’s holiday in Germany.

The Royal Bank of Canada’s (RBC) debut covered bond issue is expected to closely follow existing UK structures when it is launched after a roadshow starting on Monday. RBC is hopeful that this familiarity coupled with Canada’s stable housing market will prove appealing to investors.