Covered Bonds

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.

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

Despite growing concerns that a Spanish bad bank will cause collateral pools to shrink, there is a growing sense of confidence that real money Cédulas investors will not become forced sellers as bonds hold the investment grade rating threshold and the ECB dampens systemic risk fears.

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

The future looks bleak for Credit Immobilier de France (CIF), despite €28bn of French government guarantees that bode well for a spread tightening. A bank merger has not been entirely ruled out but as this would require a change of law, it looks unlikely. And, with the borrower’s viability rating downgraded to F, Fitch says it will be forced into run-off.

Deutsche Pfandbriefbank has mandated Barclays and UBS to conduct investor meetings in the UK to see if there would be enough demand for a sterling denominated covered bond. Despite surprise and scepticism that the borrower would be able to pull it off, the roadshow should at least help broaden its investor base.