Covered Bonds

Standard & Poor’s deadline for the conclusion of reviews prompted by the introduction of its new rating methodology in December runs out today (Friday), with 51 of 98 covered bond programmes still on CreditWatch at the time The Cover went to press. The rating agency yesterday carried out several rating actions, including the first upgrade under its new criteria – in Spain.

Compagnie de Financement Foncier is on course to price the first US targeted dollar benchmark for a European issuer since mid-2007, a three year obligations foncières issue.

Moody’s yesterday (Wednesday) raised the foreign currency long term rating of South Korea’s Kookmin Bank after upgrading the sovereign, citing an exceptional level of resilience to the crisis.

Intesa Sanpaolo has launched its inaugural covered bond, a Eu2bn seven year Italian public sector deal that will be priced at 50bp over mid-swaps, in line with guidance, later today (Thursday). Meanwhile, France’s Caisse de Refinancement de l’Habitat has reopened a 2020 issue and Spanish savings bank Caja Murcia is on a roadshow.

Helaba yesterday (Wednesday) priced a Eu1bn seven year public sector Pfandbrief issue flat to agencies after building an order book that was more than five times oversubscribed. The issuer told The Cover that its return was prompted by a convergence of spreads available in the international and domestic markets.

Belgium’s banks hope to have a reworked draft of a covered bond law ready before the summer, but fear that the country’s presidency of the European Union in the second half of the year could hinder the project’s progress as priority may be given to European matters, an official familiar with the legislative initiative told The Cover.

Dexia Municipal Agency took advantage of its own and others’ redemptions to sell its third benchmark covered bond of the year yesterday (Tuesday), a Eu1bn five year obligations foncières issue.

Helaba will today (Wednesday) price its first jumbo Pfandbrief in six years, a Eu1bn seven year issue that, in the words of one syndicate official, met with a “complete stampede” for paper. Meanwhile, Ibercaja priced a Eu500m five year deal and Intesa Sanpaolo is expected to make its debut shortly.

Moody's will not give any economic value to non-EEA assets outside Switzerland, the US and Japan in German cover pools, but will continue to give full value to Swiss collateral backing Austrian and German covered bonds, the rating agency said yesterday (Tuesday).

DnB Nor Boligkreditt yesterday (Monday) sold the biggest five year benchmark of the year, while a Eu1bn 10 year BNP Paribas Home Loan issue attracted yield-oriented demand in a well supported covered bond market.

Fitch yesterday (Monday) downgraded mortgage covered bonds issued by Alpha Covered Bonds plc, Marfin Egnatia Bank and National Bank of Greece because of a downgrade of the Greek sovereign rating and subsequent cuts of the banks’ issuer ratings.

Dexia Municipal Agency built an order book in excess of Eu1.25bn for a five year obligations foncières issue this (Tuesday) morning, while demand for new Spanish supply was subdued. A German bank, meanwhile, is expected to firm up plans shortly that will make it the sixth issuer to tap the covered bond market this week.