Covered Bonds

Moody’s has downgraded Sparkasse KölnBonn from Aa2 to A1, on stable outlook, as a result of the bank’s high risk profile and relatively low capital adequacy.

Swedbank Mortgage will today (Monday) price a seven year covered bond at the tight end of guidance of the 60bp over mid-swaps area. The deal marks the beginning of what looks set to be a busy week in the covered bond market as other issuers have rushed to secure their place in a line-up that is already four institutions deep.

Abbey National Treasury Services priced a Eu1bn three year covered bond at 68bp over mid-swaps yesterday (Thursday) after having gone out with guidance mindful of the eye-catching spread at which Lloyds TSB had initially marketed a deal on Tuesday. An official at Lloyds TSB, meanwhile, told The Cover that judging the right starting level had been more complicated than usual.

Fitch yesterday (Thursday) revised the outlook on Marfin Egnatia Bank’s long term issuer rating from stable to negative because of its Greek exposure.

SEB AG has become the first German Pfandbrief issuer to increase overcollateralisation on what Moody’s considers a committed basis to protect a covered bond rating.

The European Central Bank reported Eu1.732bn of settled purchases under its Eu60bn covered bond programme this week, including the second highest volume on a single day.

Swedbank Mortgage is planning to launch a seven year benchmark covered bond next week, with market participants suggesting that the deal could come at a wider level than was expected earlier this week.

Standard & Poor’s has affirmed Landesbank Hessen-Thüringen’s public sector covered bonds at AAA under its new rating methodology, and withdrawn its AAA, watch negative, rating of Standard Life Bank’s programme following a redemption of the issuer’s last outstanding series.

Fitch has revised the outlook on the A long term issuer rating of SpareBank 1 Boligkreditt from stable to negative, but upgraded its support rating from 2 to 1.

Standard & Poor’s is preparing a wide-ranging review of its rating criteria for financial institutions. The rating agency said it may lead to “modest adjustment” in the ratings of some banks, but that there would not be a systematic change in any direction.

Abbey National Treasury Services has built a thrice oversubscribed order book for a Eu1bn three year issue that will be priced today (Thursday), a day after Lloyds TSB made its Regulated Covered Bond debut. Meanwhile, two more new issues have been mandated.

Canadian Imperial Bank of Commerce recently priced a $2bn (Eu1.42bn/C$2.12bn) three year covered bond issue that was the first benchmark targeted at US investors in two-and-a-half years. The Cover spoke to CIBC about the issue this week, with regulatory reporting restrictions on the deal having just ended.