Covered Bonds

The Cover understands that the House Financial Services Committee will hold a hearing dedicated to covered bonds next Tuesday.

The UK authorities’ commitment to safeguarding covered bonds from any potential negative consequences of the 2009 Banking Act was recently underlined by Andrew Bailey, who has been responsible for the Bank of England’s interventions in the banking sector during the crisis and heads its Special Resolution Unit.

The European Central Bank reported no increase in settled covered bond purchases under its Eu60bn programme today (Wednesday). This is the first time that there has been no increase.

Moody’s put the A2 ratings of WestLB and WestLB Covered Bond Bank on review for possible downgrade yesterday (Tuesday), anticipating that the bank will gradually become less systemically important.

The UK government will hold a consultation in early 2010 on potential supplementary rules for Regulated Covered Bonds, according to the Pre-Budget Report released today (Wednesday).

Münchener Hypothekenbank was downgraded from Aa3 to A1 by Moody’s yesterday (Tuesday), on concerns over the bank’s capacity to absorb potential losses given a shift towards riskier commercial real estate lending in recent years.

Canadian Imperial Bank of Commerce priced the first Canadian covered bond in Swiss francs yesterday (Tuesday), a Sfr675m (Eu447m) two tranche transaction. The issuer spoke to The Cover about why it chose to tap the market rather than Canadian dollars or euros.

Canadian Imperial Bank of Commerce is in the market today (Tuesday) with the first non-domestic currency Canadian covered bond of the year, a debut, two tranche Swiss franc issue.

The daily average of covered bonds bought under the European Central Bank’s Eu60bn programme fell to its lowest level since 22 September today (Tuesday) after an increase of Eu102m was reported.

Covered bond analysts are forecasting benchmark covered bond issuance in the range of Eu140bn-Eu170bn in 2010, below 2006’s record levels but up on this year’s total supply and approaching that of 2007.

Standard Life Bank has increased the overcollateralisation of its covered bond programme to a level that Moody’s considers consistent with a Aaa rating, where the covered bonds were affirmed yesterday (Monday).

Standard & Poor’s has revised the outlook on Banco Santander Totta from stable to negative after the outlook on Portugal was changed from stable to negative.