Covered Bonds

A poll of delegates at a recent Moody’s investor briefing found almost half to be sceptical about covered bonds being a viable alternative to residential mortgage-backed securities in the US. However, in a discussion that followed, panellists argued that the asset class could prove complementary to RMBS.

The European Central Bank criticised a proposed waiver in CRD III allowing the senior tranches of self-originated MBS to be used as collateral for covered bonds on Monday, surprising many market participants, who said that the criticism appears to be due in part to a misunderstanding.

The availability for lending of the Eurosystem’s covered bond purchase programme portfolio probably gives market participants confidence in the functioning of the market, the European Central Bank said today (Thursday).

Martti Porkka is stepping down as managing director of Aktia Real Estate Mortgage Bank in the autumn and will leave the Finnish covered bond issuer next year.

European Central Bank criticism of a proposed waiver in CRD III allowing unlimited use of senior units of self-originated MBS in cover pools surprised many market participants, who have said that the criticism, revealed on Monday, appears to be due in part to a misunderstanding of the regulation. However, the ECB’s pronouncement is not expected to derail the formal adoption of the proposed amendment to the CRD.

Bank of New Zealand has welcomed the release by the Reserve Bank of rules for the repo eligibility of covered bonds. Meanwhile, Commonwealth Bank of Australia’s CFO said today (Wednesday) that covered bonds are part of the solution to funding issues facing Australia banks.

Issuers of six out of eight German mortgage Pfandbrief programmes that Fitch has had on negative review have provided detailed information about commercial mortgages in their cover pools that the rating agency requested, while two have not yet done so.

Bayerische Landesbank this (Wednesday) morning increased a 2014 public sector-backed Pfandbrief by Eu125m, becoming the second German issuer this week to price a tap through mid-swaps.

Covered bond legislation could be in place in Cyprus by the end of October if a draft law and accompanying regulatory directive move smoothly through several stages to a final step of parliamentary approval, according to a government official.

Criteria governing the eligibility of covered bonds as collateral for domestic market repo operations have been set out by the New Zealand central bank, which previously announced plans for a policy consultation.

The European Central Bank has criticised the conditions of a proposed waiver in CRD III allowing the senior tranches of self-originated residential and commercial mortgage-backed securities to be used as collateral for covered bonds, and suggested that any waiver not be extended beyond 2013.