Covered Bonds

Standard & Poor’s yesterday (Thursday) affirmed its AAA ratings of Dexia Municipal Agency’s obligations foncières and WestLB’s public sector Pfandbriefe. However, WestLB’s Pfandbriefe would lose their triple-A rating if the issuer were downgraded by one notch.

The European Central Bank in January bought more covered bonds in the primary market than in any other month of its Eu60bn purchase programme, according to its latest monthly report on the scheme released yesterday (Thursday).

Société Générale SCF yesterday (Wednesday) priced the tightest 12 year benchmark covered bond since the onset of the financial crisis, a transaction that a lead syndicate official said showed good demand for strong names and jurisdictions despite volatility in parts of the sovereign market.

Moody’s is reviewing the potential implications for covered bond and structured finance ratings of a deterioration in Greece’s public finances, in particular whether a Aaa rating ceiling is appropriate in light of an A2 sovereign rating.

Standard & Poor’s has withdrawn its ratings of SNS Bank’s covered bond programme at the issuer’s request, after affirming the ratings at AAA and assigning them a negative outlook.

A Greek household debt restructuring law that is under public consultation could lead to negative rating actions on Greek covered bonds and securitisations if enacted in its current form, according to Fitch.

Fitch yesterday (Tuesday) placed on rating watch negative 48 of the 54 multi-cédulas it put under analysis in December and affirmed the remaining six at AAA. In the absence of remedial action, the issues placed on rating watch negative are in the majority of cases likely to be cut to between AA+ and AA-, said the rating agency.

Société Générale SCF has closed the order books on a 12 year public sector benchmark that will be priced later today (Wednesday), becoming the first issuer to sell a deal this week as blackout periods and challenging market conditions have kept others at bay.

The Danish government is planning to amend the country’s covered bond framework to rectify an imbalance that has been in place since new legislation was introduced in 2007, but market participants have played down the impact of the change.