Covered Bonds

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.

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.

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.

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.

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.

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.

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.

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 December auctions.

After an impressive rally in covered bond spreads, Australian banks are likely to concentrate on offshore markets for covered issuance and use RMBS to tap the domestic buyer base, the Reserve Bank of Australia’s assistant governor for financial markets said on Monday.

Norway’s Terra Boligkreditt began a week long roadshow on Monday, ahead of what could be its first ever jumbo covered bond. But the prospect of a limit on Norwegian covered bond issuance should prompt questions from investors.

October 21-23, 2012 Fontainebleau Miami Beach - Miami, FL

Bankinter’s blowout three year Cédulas was a trade that had seemed almost unimaginable until the curious decision by Moody’s to reaffirm Spain’s Baa3 rating. The agency’s reprieve has opened a funding window for other less systemically important covered bond issuers who want to demonstrate that they still have market access. But borrowers must be ready to move quickly as sentiment could easily sour.