Covered Bonds

Terra Boligkreditt has sold a Nkr1bn (Eu118m) 10 year covered bond after a rise in yields enabled the issuer to offer a 5% coupon attractive to investors.

Congressman Scott Garrett told The Cover yesterday (Thursday) that he is optimistic that covered bonds can gain bipartisan support and also overcome the concerns of the Federal Deposit Insurance Corporation, in an exclusive interview before next Tuesday’s House Financial Services Committee hearing.

Settled purchases under the European Central Bank’s covered bond programme rose by Eu41m today (Thursday), meaning that buying reported so far this week is just Eu236m – roughly the average amount that needs to be bought daily for the target Eu60bn to be hit by the end of the scheme.

The Committee of European Banking Supervisors has included covered bonds among the instruments banks can hold as part of liquidity buffers, in guidelines released yesterday (Wednesday).

Fitch placed the AAA ratings of covered bonds issued by National Bank of Greece, Alpha Covered Bonds plc, and Margin Egnatia Bank on rating watch negative yesterday (Wednesday) following the downgrade of Greece’s sovereign rating and the subsequent downgrade of Alpha Bank’s and NBG’s issuer ratings.

Moody’s cut public sector unguaranteed covered bonds issued by Hypo Alpe-Adria-Bank International from Aaa to Aa1 yesterday (Wednesday) following a downgrade of the issuer’s rating from Baa1 to Baa2 last Friday (4 December).

In brief: OTP Mortgage Bank yesterday (Wednesday) increased a Eu50m covered bond it issued last week by Eu1bn.

The Committee of European Banking Supervisors has included covered bonds among the instruments banks can hold as part of liquidity buffers, in guidelines released yesterday (Wednesday). [Expands on earlier news alert.]

Fitch is keeping Northern Rock’s AAA covered bond ratings under analysis pending an announcement of the final terms of the UK government’s guarantee of the bank’s covered bond obligations and any steps taken to support the covered bonds’ credit rating, the agency said yesterday (Wednesday).

The UK government will hold a consultation in early 2010 on potential supplementary rules for Regulated Covered Bonds, it was announced in the Pre-Budget Report yesterday (Wednesday). Covered bonds are also referenced in a consultation paper on strengthening capital standards released by the Financial Services Authority today (Thursday).

The Swiss National Bank is halting its purchases of Swiss franc private sector bonds, including covered bonds.

Moody’s put Anglo Irish Bank Corporation’s A3 rating on review for possible downgrade yesterday (Tuesday) while the banks’ future is discussed with the European Commission.