Covered Bonds

Fixed income markets were this (Monday) morning taking the Spanish authorities’ rescue of Caja de Ahorros de Castilla-La Mancha (CCM) calmly, despite it being the first bailout of a bank in the country since the crisis began.

Moody’s on Friday cut BRE Bank Hipoteczny’s public sector covered bonds from Aa3 to A1. Their rating as well as that of the Polish bank’s mortgage covered bonds remain on review for possible further downgrade.

Standard & Poor’s today (Monday) provided clarification of one of the measures that it has proposed to help identify the degree of asset-liability mismatches in a covered bond programme. S&P’s explanation of how it calculates a covered bond programme’s maximum net stressed liquidity need comes one working day after the comment period on its proposed new covered bond rating criteria closed.

Although Skandinaviska Enskilda Banken on Tuesday took the recovery of the jumbo market beyond France and Germany, market participants are being cautious about taking this as a sign that the market is open to all issuers.

Banco Cooperativo Español on Wednesday priced a Eu1.4bn three year government-guaranteed deal, showing that despite the relentless pace of guaranteed issuance from Spain, the right name can still drum up plenty of investor interest.

Fitch on Wednesday affirmed Eurohypo Lux’s outstanding lettres de gage publiques at AAA, following an increase in overcollateralisation to counter mismatches in its cover pool.

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Caisse de Refinancement de l’Habitat yesterday (Wednesday) returned to the jumbo market with a 10 year covered bond priced at the same level as last week’s Société Générale SCF obligations foncières in the same maturity. This achievement was hailed by market participants, although the issuer was not completely satisfied.

Moody’s yesterday (Wednesday) downgraded the senior debt rating of Bank of America NA from Aa2 to Aa3, on stable outlook, concluding a review for possible downgrade that started earlier this month.

The law amending the Pfandbrief Act has come into effect today (Thursday), after it was published in the Bundesgesetzblatt, the official law gazette, yesterday (Wednesday).