Covered Bonds

Moody's yesterday (Wednesday) placed on review for possible downgrade the Aaa rating of The Co-operative Bank’s mortgage-backed covered bonds.

Westfälische Landschaft Bodenkreditbank yesterday (Wednesday) seized on a favourable issuance window to make one of its rare appearances on the jumbo covered bond market. The issuer was rewarded with what appears to be the biggest order book for a Pfandbrief benchmark so far this year in spite of punchy pricing.

Compagnie de Financement Foncier yesterday (Tuesday) achieved broad support for its first jumbo since February 2008, a Eu1.25bn 12 year issue that was the longest dated covered bond benchmark since June 2008. The issuer told The Cover that it was keen to take advantage of the window created by the European Central Bank announcement on Thursday.

The European Central Bank gave an insight to into the role it sees covered bonds playing today (Wednesday) in the publication of a report “EU Banks' Funding Structures and Policies” published after an assessment of the impact of the crisis by its Banking Supervision Committee. Its release comes after the ECB’s announcement last Thursday that it would be buying as much as Eu60bn of covered bonds to support the eurozone financial system.

Despite considering a new issue, La Caixa looks unlikely to follow-up on Monday’s reopening of the Spanish market by Santander, but a French issuer is instead said to be due to launch a benchmark deal today (Wednesday).

Japanese banks appear unlikely to be quickly drawn to the covered bond market after South Korea’s Kookmin Bank opened it for Asian issuers, according to bankers and investors in the country.

Moody’s yesterday (Tuesday) downgraded one UK covered bond issuer and placed the rating of another on review for possible downgrade as part of selective rating actions taken on five UK banks.

Fitch yesterday (Tuesday) affirmed the AAA rating of Société Générale’s covered bond issuing arm, SG Société de Crédit Foncier, after downgrading SG SCF’s issuer rating.

The covered bond market could see another Spanish issuer today (Wednesday) follow on from the reopening of the Spanish market by Santander on Monday. Meanwhile WL Bank has already closed books on the first jumbo Pfandbrief since mid-March. [Published at 1050 CET.]

WestLB said yesterday (Tuesday) that it will sell Westdeutsche ImmobilienBank as part of a plan to halve its asset base and restructure its ownership in exchange for European Commission approval of its state aid.

Standard & Poor’s yesterday (Tuesday) downgraded Eurohypo’s rating from A to A-, on negative outlook.

Westfälische Landschaft Bodenkreditbank is due to price the first jumbo Pfandbrief since mid-March today (Wednesday) at a level much tighter than the last benchmark public sector Pfandbrief. But bankers and investors warned that other issuers are unlikely to be able to repeat this feat.