Covered Bonds

Royal Bank of Scotland built the second biggest order book for a covered bond this year to price a Eu2bn 10 year deal yesterday (Thursday), which a syndicate banker at one of the leads said was a reward for the careful execution and strong performance of the issuer’s previous transactions. Dexia Kommunalbank Deutschland stuck to the short end of the curve to raise Eu1bn of funding via a three year public sector Pfandbrief.

A déjà vu involving Eurohypo prompted The Cover to remember that it never got around to publishing the annual post-ECBC/Euromoney edition of The Blackberry Chronicles. But rather than simply rib the winners from Zurich, we thought we'd open proceedings by raising a glass to those that failed to put in an appearance.

Royal Bank of Scotland built the second biggest order book for a covered bond this year to price a Eu2bn deal on Thursday as investors seized an opportunity to lock in a yield of nearly 4% for 10 years.

Fitch upgraded Berlin-Hannoversche Hypothekenbank (Berlin Hyp) from A+ to AA-, on stable outlook, today (Thursday), because of Landesbank Berlin's acquisition of additional shares in Berlin Hyp and announcement that it will enter into a profit and loss transfer agreement with its subsidiary in the near future, subject to shareholder agreement.

A move by the European Central Bank to set out terms whereby it will accept as collateral for repo funding structured covered bonds issued by closely linked institutions has been interpreted by some covered bond analysts as the ECB pushing ahead with its own definition of a structured covered bond in the absence of one from the industry.

Standard & Poor’s affirmed Bank of Ireland Mortgage Bank’s covered bond programme at AAA yesterday (Wednesday), but revised its outlook from stable to negative because of a change to the outlook of Bank of Ireland from stable to negative on 14 September.

Eurohypo is understood to have called off a three year dollar benchmark transaction it was preparing yesterday (Wednesday) after generating scant demand, with the deal’s documentation said to have been a key reason for this.

Investors flocked to a Eu2bn Royal Bank of Scotland covered bond today (Thursday), attracted by the opportunity to lock in a 4% coupon for 10 years, while a Eu1bn three year Dexia Kommunalbank Deutschland issue was also oversubscribed as primary market activity stepped up a gear following a Eu1bn deal from BNP Paribas Public Sector SCF yesterday.

BNP Paribas Public Sector SCF launched a Eu1bn five year obligations foncières today (Wednesday) that is only the fourth French benchmark covered bond sold in six-and-a-half weeks, while yet another Italian is planning to tap the market and the UK’s Royal Bank of Scotland is lining up a 10 year Regulated Covered Bond.

Landesbank Hessen-Thüringen priced its first benchmark mortgage backed Pfandbrief yesterday (Tuesday) to build on a return to the international markets in April, and the issuer told The Cover that the deal was fuelled by the prospect of achieving pricing comparable to that available in its domestic market.

Moody’s assigned a Aa1 rating to mortgage backed covered bonds of Caja España yesterday (Tuesday), after rating the new entity Baa1, on stable outlook.

Standard & Poor’s is assessing how a restructuring of four covered bond programmes of HRE group resulting from a transfer of assets to wind-down entity FMS Wertmanagement will affect its analysis of the covered bonds.