Covered Bonds

Moody’s yesterday (Thursday) placed Banca Popolare di Milano on review for possible downgrade, but affirmed the issuer ratings of four other Italian banks that have issued or plan to issue covered bonds, as part of rating actions on 43 Italian banks and financial institutions.

Northern Rock may buy back debt, potentially including subordinated debt, covered bonds and/or its Granite residential mortgage backed securities, as part of its transformation into a good bank/bad bank structure, it has been reported.

Northern Rock may buy back debt, potentially including subordinated debt, covered bonds and/or its Granite residential mortgage backed securities, as part of its transformation into a good bank/bad bank structure.

The Swiss National Bank this (Thursday) morning congratulated itself on the success of its covered bond purchase programme, which could hold clues as to how other central bank schemes might work.

Republican congressman Scott Garrett and Democratic congressman Paul Kanjorski yesterday (Tuesday) put forward legislation aimed at supporting the development of covered bonds in the US, the “Equal Treatment For Covered Bonds Act”.

Market participants appear divided as to the receptiveness of the primary market to a new jumbo issue, but there is nevertheless speculation that one issuer could prevent this week becoming the first empty week since the ECB’s Eu60bn covered bond purchase plan was announced on 7 May.

Moody’s yesterday (Tuesday) downgraded two cédulas hipotecarias and two cédulas territoriales programmes, and affirmed the Aaa ratings of three cédulas territoriales programmes. Seven other cédulas programmes and 59 series of multi-cédulas remain on review for possible downgrade.

The European Central Bank recognises the potential damage that changes to rating methodologies could inflict on the covered bond market in its latest Financial Stability Review, which was released yesterday (Monday).

The primary market has been taking a breather this week, but the lull in new issuance is not expected to last long, according to market participants, with at least one unnamed issuer expected to announce a mandate and a roadshow.

Moody’s yesterday (Monday) cut the ratings of 25 Spanish banks, heightening the risk of downgrades to certain cédulas. However, the ratings of jumbo cédulas issued by individual banks appear safe.

Moody's and SEB AG are in discussions about the latter’s proposals to enhance its covered bond programmes to avert a downgrade, the rating agency said yesterday (Monday).

Standard & Poor’s yesterday (Monday) downgraded Anglo Irish Bank Corp Ltd from A- to BBB+ and removed the rating from negative watch.