Covered Bonds

Fitch cut mortgage-backed covered bonds issued by Spain’s Caja Navarra from AAA to AA+ today (Wednesday), because of a downgrade of the bank’s rating from A to A- on 30 July.

Fitch downgraded mortgage-backed covered bonds issued by Spain’s Caixanova from AA+ to AA and placed them on Rating Watch Negative yesterday (Tuesday), because of a downgrade on Monday of Caixanova from A- to BBB+.

The version of the US Covered Bond Act of 2010 passed by the House Financial Services Committee last month will help investors, according to Moody’s, but does not adequately deal with market value risk and could lead to different standards for different types of issuers.

Moody’s downgraded unguaranteed public sector-backed covered bonds issued by Austria’s Hypo Alpe-Adria-Bank from Aa1 to Aa2 yesterday (Tuesday) after cutting the issuer rating earlier in the day. The rating agency also cut Vorarlberger Landes- und Hypothekenbank’s issuer rating.

Caja Madrid has played down buybacks of around Eu1.5bn of its cédulas hipotecarias that were referred to in a regulatory notice filed yesterday (Tuesday) with Comisión Nacional del Mercado de Valores, Spain’s stock market regulator.

Fitch downgraded Caixanova from A- to BBB+ and placed it on Rating Watch Negative, yesterday (Monday), because of advanced merger talks with Gaixa Galicia.

Moody’s yesterday (Monday) assigned a definitive rating of Aa3 to commercial mortgage-backed covered bonds issued by SpareBank 1 Næringskreditt.

Standard & Poor’s yesterday (Monday) withdrew its ratings of Yorkshire Building Society’s covered bond programme after affirming them at AA+ under its revised rating methodology to take into account potentially volatile asset-liability mismatch risk.

Market conditions are conducive to new covered bond issuance – even from peripheral jurisdictions – but with the holiday season in full swing issuers may not be in a position to take advantage of any opportunities, according to syndicate bankers.