Covered Bonds

Next week promises to be as busy as this week’s record opening to a year, with two more issuers having officially announced plans for benchmarks in the past 24 hours on top of three outstanding mandates. Supply of Eu5.5bn yesterday (Thursday) took the week’s total to Eu10.25bn from seven deals, just short of the eight totalling Eu11bn in the busiest ever week for the covered bond market at the end of September.

Halfway through its covered bond purchase programme, the European Central Bank is Eu1.410bn behind an assumed target path under which the Eu60bn assigned to the scheme will be spent at the end of June when it finishes.

Standard & Poor’s has revised its outlook for Fortis Bank (Nederland) from developing to positive because of greater certainty that it will be merged with the Dutch state-owned portion of ABN Amro Bank within two years.

With four new jumbos hitting the market this (Thursday) morning, the number of benchmark issues this week is second only to the last week of September. However, investors have expressed disappointment about what they called expensive spread levels.

A Eu1.5bn seven year covered bond for BNP Paribas off its Home Loan programme yesterday (Tuesday) met with a strong reception from investors who, according to a BNP Paribas official, demonstrated an encouraging degree of conviction in the new issues that reopened the primary market.

You voted in your hundreds. Now find out which benchmark transaction of 2000-2009 has won the title of The Cover’s Deal of the Decade.

Preparations for a new Pfandbrief for Dexia Kommunalbank Deutschland that began in December came to fruition yesterday (Tuesday) as the issuer priced a Eu1.25bn seven year benchmark, fulfilling its intention of coming to market in early 2010 if market conditions were supportive.

A crowded pipeline suggests that new issuance could approach the frenzy of September, when record volumes of covered bonds hit the market. But with at least 10 issuers said to have plans to launch deals in the wake of the three that have already been priced, some market participants are already sounding a note of caution.

Bankers said that Banco Bilbao Vizcaya Argentaria turned over a new leaf with the first Spanish covered bond of the year today (Tuesday), a benchmark transaction that – like deals for BNP Paribas and Dexia Kommunalbank Deutschland – is set to be priced at the tight end of guidance on the back of an oversubscribed order book. The trio of deals mark the reopening of the jumbo market in 2010.

A Eu6m increase in purchases under the European Central Bank’s programme reported today (Tuesday) left the cumulative total Eu792m short of an assumed target path necessary for Eu60bn to have been spent at the end of June, putting it the furthest behind schedule since reporting began. Please note: after today The Cover will no longer report ECB covered bond purchases daily, but will publish a weekly round-up on Fridays and on an ad hoc basis when appropriate.

The Cover will be publishing its final benchmark league tables for 2009 in the coming days. We are double-checking the data with the top few banks to ensure that the final result is accurate – if you would like to verify that the information we have about your bank’s league table credit or any other’s is correct, then please contact us as soon as possible and we will be happy to send it to you.

Fitch on 22 December affirmed Northern Rock’s covered bonds at AAA based on its revised criteria for assessing liquidity risk in covered bonds, without giving credit to a guarantee for the covered bonds provided by the UK Treasury.