Covered Bonds

Rating downgrades on covered bonds are slowing, and the share of negative covered bond rating outlooks is at its lowest for three years, Standard & Poor’s said this week. It also gave a positive view on SME backed covered bonds and pass-through structures.

Denmark’s efforts to improve its covered bond law and reduce refinancing risk for its banks are steps in the right direction, Standard & Poor’s said on Wednesday. However, refinancing risk will continue to be a problem.

Canadian and Spanish banks could return to the covered bond market soon though only three banks have mandated and undertaken roadshows.

Canadian banks could return to the covered bond market soon, encouraged by favourable swap rates, bankers told The Cover on Thursday. Meanwhile, the markets awaited the outcome of the European Central Bank meeting, which was expected to leave rates unchanged.

Covered bond rating downgrades are slowing down and the share of negative covered bond rating outlooks is at its lowest for three years, Standard & Poor’s said this week. It also gave a positive view on SME backed covered bonds and pass through structures.

Covered bond bankers reported further buying in the short end of the curve on Wednesday but some questioned the sustainability of the correction and said sentiment could soon turn negative. Thursday’s European Central Bank meeting and Friday’s US Non-Farm Payroll numbers will set the tone for the primary market and issuance hopes for next week.

Denmark’s efforts to improve its covered bond law and reduce refinancing risk for its banks is a step in the right direction, Standard & Poor’s said on Wednesday. However, refinancing risk will continue to be a problem.

Credit Suisse’s head of covered bond origination has left the bank, following months of speculation over his position, EuroWeek Bank Finance understands.

The Irish covered bonds issued by Depfa Bank have been attracting strong interest, dealers reported on Monday, with further convergence to its Irish peers still likely. There has been speculation that the bank will be wound down, not sold to an unrated entity, after the deadline for its sale passed.

Cédulas Territoriales, Spanish covered bonds backed by public sector assets, have benefitted from extraordinary state sponsored liquidity support programmes and this is credit positive, said Moody’s on Tuesday.

Credit Suisse’s head of covered bond origination has left the bank, The Cover understands.

After days of softening, the tone in the secondary covered bond market improved on Tuesday, with bankers reporting an especially solid bid at the short end of the curve. But interest has also extended to the five year area, which had until recently been soft. The move has been fuelled by increased hopes of a European Central Bank rate cut on Thursday, as well as a defensive play against high and rising volatility.