Covered Bonds

A transparency initiative launched by the Association of German Pfandbrief Banks (vdp) that aims to make it easier for market participants to analyse the cover pools of Pfandbrief issuers has met with approval from covered bond analysts and investors.

A 10 day auction by Denmark’s Nykredit to refinance adjustable rate mortgages resulted in the sale of Dkr44.3bn (Eu5.95bn) covered bonds and historically low interest rates for retail borrowers, according to the mortgage bank.

Fitch downgraded Spanish bank La Caixa from AA- to A+, on stable outlook, yesterday (Monday), because of challenges to the bank’s asset quality posed by a downturn in the Spanish property market and the country’s weak economy.

SNS Bank will today (Tuesday) price the second long dated Dutch benchmark covered bond in a week, while Banco Popular Español has set the spreads for an exchange that is open until Friday and a Swedish covered bond issuer has set up a US MTN programme.

Moody’s cut covered bonds issued by Anglo Irish Bank Corporation (Anglo Irish) and Anglo Irish Mortgage Bank (AIMB) from Aaa to Aa2, on review for possible downgrade, on Friday, because of concerns over the liquidity of commercial assets backing the covered bonds. Meanwhile, Fitch put AIB Mortgage Bank’s mortgage covered securities on Rating Watch Negative.

A rare one year issue, from Germany’s SEB, was the only live deal this (Monday) morning as the covered bond market got off to a slow start, despite one syndicate banker saying that the market was open for quality supply. Meanwhile, SNS Bank has mandated for a new benchmark.

Fitch placed Caja de Ahorros de Murcia and three other Spanish banks on Rating Watch Negative on Friday, because the General Assemblies of the four cajas approved an integration contract to form a banking group through an Institutional Protection Scheme (SIP). The rating agency said the SIP contract is expected to include a legally-binding cross-guarantee mechanism encompassing solvency and liquidity.

New issues for GCE Covered Bonds and UniCredit Bank Austria and a large Caja Madrid tap took this week’s supply of Eu500m-plus deals to a solid Eu6.7bn, with GCE said to have benefitted from a recent paucity of new three year issuance from so-called core jurisdictions.

Fitch placed Caja Madrid on Rating Watch Negative yesterday (Thursday) and Bancaja and Caixa Laietana on Rating Watch Positive, following approval of an integration contract by the General Assemblies of the three cajas and several others to form a group through an Institutional Protection Scheme (SIP).

Banca Monte dei Paschi di Siena reached a Eu1.25bn size with its second obbligazioni bancarie garantite benchmark on Tuesday despite coming on a hectic day. The issuer spoke to The Cover about the deal’s timing, maturity and pricing.

Fitch downgraded covered bonds issued by Anglo Irish Bank Corporation and Anglo Irish Mortgage Bank (AIMB) from AAA to AA+, and placed them on Rating Watch Negative, yesterday (Thursday), after downgrading the issuers from A- to BBB+ on Wednesday because of an announcement by the Irish government that Anglo Irish will be split into an asset recovery bank and a funding bank.