Covered Bonds

Moody's could downgrade Abbey National’s covered bonds from triple-A after putting them under review. The move comes amid wider concerns over the swaps in the covered bond programmes of banks whose senior ratings were recently downgraded to A3.

Former Société Générale covered bond analyst, Jose Sarafana, on Monday began a new job in credit sales at Aurel-BGC in Paris. Jean-David Cirotteau has taken on his former responsibilities at SG.

Australia’s Westpac Banking Corp returned to the euro market to launch the jurisdiction’s first seven year covered bond on Monday. But a trio of competing senior unsecured trades contributed to a slow book build, said syndicate bankers, with some also suggesting guidance had been set too tight.

Standard & Poor's has rated a Cédulas Hipotecárias programme for Deutsche Bank, giving it the highest possible Cédulas rating in the country. But, despite their unusual nature of the bonds they will not be publically distributed. In an environment where jurisdiction trumps almost everything, the five bonds that have already been issued off the programme will be retained for funding with the ECB.

Finnish prime minister, Jyrki Katainen, has suggested that Spain and Italy could use covered bonds backed by state assets or tax revenue to ease their funding needs. Covered bond analysts initially suggested the bonds would be issued through the respective banking sectors. But if the bonds are sold or auctioned directly by the sovereign, the covered bond label will not be applicable, they said.

Deutsche Pfandbriefbank (Pbb) on Wednesday priced a €500m mortgage backed Pfandbrief flat to its curve for the second time in just over a month. The issuer said it plans to launch at least one more euro benchmark after the summer break, and could bring jumbo deals in the future.

Investors are increasingly fretting over their Cédulas exposure following a round of Spanish bank and bond downgrades this week.

New Zealand’s ASB Finance expects to become a regular benchmark issuer in the euro market, having launched its debut covered bond in the common currency this week.

Deutsche Pfandbriefbank (Pbb) has told The Cover that it is planning to launch at least one more euro benchmark covered bond after the summer break. The borrower has already sold three €500m mortgage backed trades so far this year, and said it could turn to jumbo deals in the future.

CaixaBank has written to its fixed income investors to explain why it has bolstered its emergency liquidity reserves, and the effect that this has had on its balance sheet. Bank treasury officials told The Cover it still has plenty of assets available on its balance sheet and confirmed that overcollateralisation would remain close to historic levels — many times higher than the legal minimum.

Increasing reliance on secured issuance and the impact that this has on senior unsecured recoveries could be factored into ratings, Fitch said on Thursday, though it added that the increase in outstanding covered bond issuance is relatively stable for the time being.

New Zealand’s ASB Finance plans to bring annual euro benchmark covered bonds following its successful debut this week. Although happy with the outcome on its first deal, the issuer told The Cover that ASB’s sound fundamentals and the advent of domestic legislation should help tighten spreads for follow-on deals.