Covered Bonds

Signs that an inflection point may have been reached are increasing, with the unguaranteed pipeline growing at the expense of government-guaranteed supply, but although conditions remain supportive the fixed income markets got off to a slow start today (Monday).

A commitment to spin off Eurohypo is expected to be a condition of the European Commission's approval of the German government's bailout of Commerzbank, but covered bond analysts have questioned whether the leading covered bond issuer is likely to attract a takeover bid or be able to go it alone.

Moody’s yesterday (Thursday) downgraded Achmea Hypotheekbank’s covered bonds from Aaa to Aa2, and left them on review for further downgrade, as a result of a deterioration in the credit quality of the issuer after the covered bond rating was put on negative review on 22 January.

Britannia Building Society has launched a debut series off its new programme and become the first UK issuer to have its covered bonds assigned Moody’s highest Timely Payment Indicator (TPI).

Two obligations foncières issuers yesterday (Thursday) tapped outstanding deals, while a third French institution this week placed covered bonds with dollar investors.

Moody’s yesterday (Thursday) cut HSH Nordbank’s rating from A1 to A2, on stable outlook, because it expects ongoing core credit losses for the German bank and pressure on its capital.

Moody's yesterday (Thursday) downgraded Mortgage & Land Bank of Latvia’s covered bonds for the second time in just over two weeks.

Caja Madrid was downgraded from AA- to A+ by Fitch yesterday (Wednesday) afternoon because of a decline in its asset quality and risk concentration.

After a long break from issuing Pfandbriefe, Austrian bank Hypo Vorarlberg is making moves to return to what was a traditional funding source for the bank.

Kookmin Bank is set to go on a roadshow next week to market its long-awaited covered bond, The Cover understands. However, questions have been raised over any claim it might have to be the first covered bond from Asia.

Münchener Hypothekenbank today (Thursday) became the fifth institution to tap outstanding issuance this month, with flows in jumbo covered bonds proving encouraging, and another tap is said to be underway.

The UK government launched its long-awaited guarantee scheme for mortgage backed securities in the Budget report yesterday (Wednesday), but there was no new initiative for the covered bond market.