Covered Bonds

Landesbank Baden-Württemberg yesterday (Monday) pursued its strategy of launching at least one benchmark covered bond a year, raising Eu1bn of funding at a cost that was comparable with spreads achievable via private placements, the issuer told The Cover.

Five new Eu500m plus covered bonds were announced in the past 24 hours after yesterday (Monday) morning’s two, despite market conditions proving worse than last week, when 12 hit the market. The deals announced today (Tuesday) are set to take euro jumbo issuance this year past Eu100bn.

ABN Amro Bank and Landesbank Baden-Württemberg this (Monday) morning followed through with new covered bonds announced last Friday, with a 10 year deal for the former representing the first Dutch benchmark since March.

Bank of New Zealand has sold the first covered bond from New Zealand, a NZ$425m (Eu242m) domestic transaction split into five and seven year tranches.

Fitch said today (Monday) that it expects forthcoming changes to deposit protection in the UK to mitigate set-off exposure in UK structured finance transactions and covered bond programmes.

Standard & Poor’s has promoted Swedish covered bonds to the highest programme category under its revised rating methodology. The reclassification comes before a Wednesday deadline the rating agency set itself to conclude reviews initiated as a result of the change in its criteria.

Standard & Poor’s on Friday placed Banco de Sabadell’s A rating on CreditWatch negative on news that the Spanish bank is in merger talks with Banco Guipuzcoano. It also kept Caja Madrid’s A rating on CreditWatch negative on the addition of Bancaja to its group of potential merger partners.

Sweden’s SEB launched a benchmark covered bond yesterday (Thursday) to demonstrate its ability to access the market in uncertain times, the issuer told The Cover, despite having last year pre-funded a large amount of debt maturing this year and the beginning of next.

Settled covered bond purchases under the European Central Bank’s Eu60bn scheme have reached Eu56.547bn, the ECB reported this (Friday) morning. It said in its monthly report yesterday (Thursday) that purchases in May were heavily concentrated in the secondary market.

Royal Bank of Scotland's debut covered bond, as seen through the bottom of EuroWeek cartoonist Olly Copplestone's whisky tumbler.