Covered Bonds

Transposing the European Commission’s covered bond directive into Spanish Cédulas law should result in multi-notch Cédulas upgrades, Fitch said. This could help allay concerns about other legal reforms that will lower collateral protection, and help boost confidence that the impending overhaul of the Spanish legal framework can be executed deftly.

NatWest Markets has come a long way since the dark days of its repeated restructurings. For a while, RBS was a punchline for gallows humour about the state of investment banking (not to mention the participation of the state in investment banking). Senior bankers jumped or were pushed, while the firm closed offices, sold off its US operations, trimmed its ambitions and seemed ready to settle down as a bit-part domestic player in the capital markets. But it is often darkest before the dawn.

Fitch has assigned an AAA rating to the debut covered bond programme of ING Bank in Australia (INGBA).

The merger between DG Hyp and WL Bank has become legally effective and the rebranded entity, DZ Hyp, is now the largest German Pfandbrief issuer.

The green covered bond market looks set for growth, possibly even outpacing the broader green bond market, said Moody’s in a report this week.

An exemption for Canadian covered bonds from bail-in is positive, said Fitch this week despite a general concern about the lack collateral available in some covered bonds, and an overvalued Canadian housing market.

National Bank of Greece has sold a €200m five year covered bond to the European Investment Bank (EIB) just as Moody’s changed its outlook on the Greek banking sector to positive.

The concept behind the European Secured Note was never genuinely driven by a desire to improve bank funding options, but by a need to ring-fence the quality of assets in covered bonds.

With €95bn issued so far this year, covered bond supply has exceeded expectations. Several analysts now suggest spreads will widen with issuance for 2018 set to reach at least €130bn.

The European Banking Authority’s final report on European Secured Notes (ESNs) was published on Tuesday. It should pave the way for the European Commission to consider setting up a legal framework for the product, which may emerge at the same time as the covered bond directive in February 2019.

The constructive trend in covered bond ratings that began three years ago, and remained in place last year, is set to continue through this year said Standard & Poor’s.

A survey conducted on behalf of the European Commission suggests European Secured Notes (ESNs) would have to offer investors appealing value relative value to covered bonds — even if they had exactly the same regulatory treatment. The survey comes amid speculation that the EC may opt to save time by including the ESN legal framework with the covered bond directive (CBD).