Covered Bonds

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.

Standard & Poor’s is reviewing the assumptions and methodologies it applies when rating public sector-backed covered bonds, and those that inform cashflow analyses it carries out for covered bonds using Covered Bond Monitor.

Münchener Hypothekenbank today (Monday) priced a Eu125m tap of a June 2015 benchmark mortgage Pfandbrief through mid-swaps.

Standard & Poor’s affirmed at AA+, on stable outlook, its rating of Deutsche Pfandbriefbank’s public sector-backed covered bonds on Friday and removed them from CreditWatch developing, where it had placed the covered bonds on 16 April after cutting them from AAA to AA+.