Covered Bonds

Moody's has assigned a top rating to Landesbank Berlin’s (LBB) Daheim Series 1-2012 structured covered bond, a deal notable for its lack of a Pfandbrief label.

National Australia Bank opened books on an ultra long dated sterling benchmark on Wednesday hot on the heels of Commonwealth Bank of Australia, which became the first non-UK issuer to tap the sterling long end less than a week ago.

SSA and corporate markets were busy on Tuesday, keeping the primary covered bond quiet. But issuance should improve this week as investors filter back from holiday, said bankers, though they warned that as spreads have tightened a long way in a short time the market may widen after the initial flurry of deals.

Moody’s cut CIF Euromortgage’s covered bonds from triple-A to Aa1 on Tuesday, after lowering the sponsor bank’s senior and short term debt ratings. The Credit Immobilier de France (CIF) group has not yet found a buyer after starting a sale process in June, and though state support is highly likely it remains locked out of the capital market with redemptions approaching.

Another milestone was set in the development of the sterling covered bond market this week when Commonwealth Bank of Australia became the first foreign issuer to price an ultra-long dated covered bond — and only the second non-domestic borrower to issue in sterling

Germany’s Schuldschein product could be set to develop into a new area, with issuers calling for a secured format.

Amendments, adopted this week, to Germany’s Pfandbrief Act that increase transparency are positive for investors but there will be no ratings impact from the Article 28 changes, said Fitch.

Nykredit Realkredit kicked off the Danish auction season this week, selling one and three year covered bonds with lower absolute yields than ever before. One year bonds will dominate the auctions as mortgage borrowers continue to prefer one year adjustable rate loans, though mortgage lenders are trying hard to push them into longer maturities.

Another milestone was set in the development of the sterling covered bond market this week when Commonwealth Bank of Australia became the first foreign issuer to price an ultra-long dated covered bond — and only the second non-domestic borrower to issue in sterling, writes Bill Thornhill.

Sparebank 1 Boligkreditt sold its tightest ever five year covered bond on Monday. The borrower has launched trades in euros, dollars, Norwegian kroner, and is monitoring the growing sterling and Australian dollar markets, chief executive Arve Austestad told EuroWeek.

The core covered bond market leapt back into life this week with a trio of euro jumbos from Dutch and Nordic issuers. But despite spreads hitting 2008 levels in some jurisdictions, many borrowers turned to the senior market first.

Danish mortgage lenders will benefit from a new best practices aimed at limiting the sale of variable rate and interest only mortgages, said Moody’s on Thursday. The rating agency report came as yields on Nykredit’s one year adjustable rate bonds hit fresh lows, making short dated variable rate mortgages even more attractive.