Covered Bonds

Standard & Poor’s yesterday (Wednesday) upgraded mortgage covered bonds issued by Portugal’s Banco BPI from A+ to AA, on stable outlook, because of improvements in the programme’s cash flow profile and higher overcollateralisation.

Treasury Secretary Tim Geithner referred to covered bonds in opening remarks at a conference on the future of housing finance in the US held yesterday (Tuesday) by the Treasury and Department of Housing and Urban Development (HUD).

The first publicly announced covered bond mandate since the middle of July hit the screens today (Wednesday), with Norway’s Terra Boligkreditt announcing that it has hired banks to carry out investor meetings. And despite a lack of other public plans, syndicate bankers are eying next week for the resumption of new issue activity.

Fitch affirmed public sector-backed Pfandbriefe of Düsseldorfer Hypothekenbank at AAA yesterday (Tuesday), and removed them from Rating Watch Negative, following an annual review of the programme.

Fitch has reviewed the spread assumptions it applies to quantify the liquidity risk of sovereign debt backing covered bonds, increasing the stresses for certain exposures, such as to southern European countries, while maintaining others unchanged, it said yesterday (Monday).

Standard & Poor’s yesterday (Monday) affirmed under its revised rating methodology public sector-backed covered bonds issued by Ireland’s Depfa ACS Bank at AA, on stable outlook, and removed them from CreditWatch developing.

Standard & Poor’s has cleared at AAA, on stable outlook, mortgage covered bonds issued by Swedbank Mortgage and removed them from negative review.

Standard & Poor’s is assessing the possible impact on Greek covered bonds of a Greek personal bankruptcy law that will enter into effect at the beginning of September, the rating agency said on Friday.

The Association for Financial Markets in Europe/European Securitisation Forum has called on the US Securities & Exchange Commission to exempt covered bonds issued under Rule 144A from Regulation AB, under which the SEC is proposing moves aimed at increasing investor protection in asset-backed securities.

Syndicate bankers are identifying the last week of August as when new benchmark covered bond supply is likely to resume, but are not ruling out an end of the summer break as early as next week.