Covered Bonds
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Landesbank Hessen-Thueringen Girozentrale (Helaba) on Tuesday became only the second issuer in four years to price a benchmark covered bond through mid-swaps.
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Terra Boligkreditt has issued its first €1bn covered bond, following extensive marketing. Not surprisingly, given the paucity of euro denominated covered bond supply, there was plenty of demand from a wide range of investors across Europe.
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After a month in which senior unsecured issuance exceeded covered bond supply by a ratio of 11 to one, covered bond practitioners are anxiously awaiting news on Terra Boligkreditt, which is poised to issue its third benchmark of the year. -
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HSH Nordbank has taken the unusual step of using a synthetic securitisation that frees up no regulatory capital at all. Instead, the credit protection provided by KfW on a portfolio of SME loans means they can now be used as collateral in HSH’s public sector Pfandbriefe — the bank’s most important source of term funding.
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Standard & Poor’s has cut BNP Paribas ratings and lowered its outlook on four other French covered bonds issuers because of rising risk in the French banking system. Meanwhile, Moody’s downgraded CIF Euromortgage’s covered bonds after taking the same action on the issuer.
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Norway’s Terra Boligkreditt should bring a measure of relief to a starving covered bond investor base next week. The borrower finishes a pan-European roadshow on Friday ahead of a potential jumbo transaction, something the covered bond market has not seen in over a month.
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Fixed rate mortgages are outpacing adjustable rate lending in Denmark for the first time since 2008, according to the Association of Danish Mortgage Banks. But analysts still expect one year adjustable rate bonds to dominate the country’s covered bond auctions in December.
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A working group has outlined an innovative framework for introducing structured covered bonds to India, using the country’s National Housing Bank as an SPV, a member of the group told The Cover.
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As if any further evidence were needed, a new report by Fitch has offered another slug of support for the reputation of European RMBS. The continent's regulators need to start giving the product the credit it deserves.
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Banca Monte Dei Paschi di Siena’s secondary covered bond spreads are holding firm following another downgrade, but Spanish spreads are weakening after their recent rally. Peripheral borrowers could still bring successful benchmarks, but compression between covered and senior levels means there is less incentive to use valuable collateral, syndicate bankers told The Cover.
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Korean issuers are starting to prepare covered bond programmes in advance of the country’s new law — after more than a year of inactivity. The South Korean Financial Services Commission published the draft bill of its Covered Bond Act on Tuesday, and said it would submit the bill to parliament by December.
