Covered Bonds

The Cypriot Ministry of Finance has prepared a draft law that provides for the issuance of special government bonds for a swap scheme that will provide credit institutions in the country with liquidity ahead of the finalisation of covered bond legislation.

The European Central Bank this (Tuesday) morning disclosed a Eu389m increase in the total of settled covered bond purchases under its Eu60bn programme, which now stands at Eu17.741bn.

A proposed amendment to Sweden’s covered bond law that sets out the options available to an administrator to obtain liquidity in the event of an issuer’s insolvency is a positive addition to the law, but will not, on its own, lead to an improved liquidity gap assessment under Fitch’s methodology, the rating agency said yesterday (Monday).

Purchases taken in by reporting of the European Central Bank’s programme over the rest of this week are likely to be heavily weighted towards the secondary market given that no eligible jumbo covered bonds are settling from today (Monday) to Friday.

A Eu1bn five year Caja de Ahorros del Mediterráneo cédulas hipotecarias on Friday concluded a difficult week in the covered bond market to the issuer’s and the leads’ satisfaction. This week looks set to be quiet again, with two or three issues expected, although market participants were this (Monday) morning more relaxed about the outlook than they were last Monday.

Belgium’s banking industry is embarking on a campaign to win political support for a covered bond law that is in a first draft form, an official at a Belgian bank told The Cover.

Primary market buying of covered bonds under the European Central Bank’s Eu60bn programme picked up in September, but still accounted for only 5.46% of new benchmark issuance and remained overshadowed by secondary market purchases, according to the third monthly report on the scheme published yesterday (Thursday).

Caja de Ahorros del Mediterráneo attracted Eu1.1bn of demand for a Eu1bn five year cédulas hipotecarias this (Friday) morning, which market participants said was a success for the issuer in a difficult market. Meanwhile, another Spanish savings bank is wrapping up its roadshow.

Crédit Mutuel-CIC has set up a second covered bond issuer, but an official at the French mutual group told The Cover that the new entity will not be issuing publicly.