Covered Bonds

Standard & Poor’s placed Intesa Sanpaolo and three other Italian banks on rating watch negative on Tuesday, and affirmed Intesa’s A+/A-1 counterparty rating.

Ratings agencies and covered bond analysts have still not reached a consensus over the most efficient way to mitigate against refinancing risk following a segregation event.

Société Générale convinced almost 150 accounts to participate in its debut euro Obligations de financement de l'habitat. The trade exceeded the already high expectations of syndicate officials following the first euro OH from BPCE.

Moody’s placed 14 UK banks on review for a downgrade, but because the covered bond market is technically short, spreads have barely reacted. Italian and Spanish covered bonds have seen better selling lately after weakness in the government market, but government bonds have underperformed.

The eurozone sovereign debt crisis has tested the covered bond product like never before. Katie Llanos-Small examines how covered bonds from the periphery have performed during the crisis, and asks what might happen if a eurozone sovereign were to default.

On the back of conducive bank finance regulation, covered bond issuance is soaring, writes Bill Thornhill. Meanwhile several countries, most notably the US, are moving towards establishing fresh covered bond markets.

New regulation is coming thick and fast, with Basel III set to re-order the fabric of the capital markets. Right now, covered bonds are the darlings of the rule-makers, and in the brave new Basel-ed world, could be the bank funding instrument of choice — unless asset encumbrance worries get the better of the authorities. Owen Sanderson looks at the regulatory threats and opportunities.

Hypo Real Estate Group has predicted that its profitable first quarter will lead to a profitable 2011 as a whole.

The covered bond market began the week with a euro benchmark for the first time in almost two months. Following the success of Dexia Municipal Agency’s five year trade on May 12, and the strong reception for short dated core issuance last week, Dexia Kommunalbank launched a three year euro benchmark on Monday

Upheaval in the Middle East is sparking Saudi Arabia’s leaders into action over its housing market. In Brazil demand for property is skyrocketing. But it is Mexico that is leading the way in developing new covered bond markets, as Phil Moore reports.

The possibility of a covered bond issuer pricing a deal inside government debt, once considered highly improbable, is now conceivable, say Deutsche Bank and Barclays Capital.