Covered Bonds

Terra Boligkreditt has mandated for its third covered bond benchmark of 2012. Strong collateral growth and larger funding needs mean it could launch its first ever jumbo trade later this month, said syndicate leads.

The transfer of assets to the proposed Spanish Asset Management Company (AMC) could hit Cédulas noteholders, as it would reduce overcollateralisation. However, as issuer defaults would become less likely, covered bondholders would stand to benefit.

Norddeutsche Landesbank could open books on a debut dollar covered bond as early as Tuesday morning, said syndicate leads on Monday. But the outlook for a first sterling trade from Deutsche Pfandbriefbank is more uncertain.

DexMA, the French local authority funding entity, has told The Cover that it will return as an Obligation Foncière issuer next year, after it is sold, subject to European Commission approval, to a group of shareholders, including the French State, La Banque Postale and Caisse des Dépôts. This follows the news that its former parent, the troubled Belgian issuer Dexia, has now fully complied with EC requirements to offload subsidiaries, after the sale of its Luxembourg unit, following earlier disposals of its Turkish and RBC Dexia businesses.

Covered bonds are highly liquid instruments and should be eligible for the top level of Basel III’s Liquidity Coverage Ratio, according to the European Covered Bond Council.

Panama’s Global Bank priced the first covered bond from the country last week, and the first from Latin America. However, while the deal showed the strength of the covered bond structure for emerging market issuers, largely due to structural enhancements that helped raise the rating into investment grade territory, Global Bank is unlikely to herald the emergence of a Latin American covered bond market.

Moody’s downgraded Aktia Real Estate Mortgage Bank’s (AMB) mortgage covered bonds from Aa1 to Aa3 on Friday. The move will come as a relief to bondholders who feared a downgrade to as low as A1. The rating news comes after the bank said three weeks ago that it was abandoning the specialist bank principle in favour of the universal model, resulting in a wind-down of AMB.

The future looks bleak for Crédit Immobilier de France (CIF) as it heads into run-off despite €28bn of French government guarantees. Its inability to broker a merger deal and save itself may have been due to its overly restrictive financial charter, said banker.

Panama’s Global Bank has priced the first covered bond from the country, and the first from Latin America, writes Bill Thornhill.

Norddeutsche Landesbank and Deutsche Pfandbriefbank have spurned the euro covered bond market, with the former looking to issue in US dollars and the latter in sterling. The two banks this week mandated leads for roadshows that, subject to market conditions, could follow next week.

On Wednesday morning Pfandbriefbank der Schweizerischer Hypothekarinstitute — the institution responsible for providing Swiss mortgage banks with loans to finance their businesses — issued a triple-tranche transaction totalling Sfr782m.

Norddeutsche Landesbank looks set to return to the primary market and take advantage of strong demand for dollar issuance, after mandating leads for a roadshow. Having already issued the first ever Flugzeugpfandbrief and a public sector backed seven year, this will be the borrower’s third covered bond funding exercise of the year – but one that could prove slightly more costly.