Covered Bonds

Fitch on Friday lowered its outlook on Alpha Bank and National Bank of Greece from stable to negative.

Eurohypo is soft-sounding a potential five year mortgage Pfandbrief today (Monday), with books expected to be opened either later today or tomorrow morning. Any deal would be the first jumbo covered bond since early February.

The European Central Bank is understood to have lifted the standing of Spain’s multi-cédulas programmes this week by upgrading them from category four to category three in its framework for deliverable collateral assets.

Britannia Building Society looks set to become a covered bond issuer after making what appear to be the necessary steps towards setting up a programme.

Bankers are hopeful that the jumbo covered bond market could be reopened next week, saying that several issuers are potential candidates, but that one in particular is most likely to test the market.

Caixanova got its inaugural three year government-guaranteed transaction done yesterday (Wednesday) afternoon. The Eu1bn issue via Barclays Capital, BBVA, BNP Paribas, Caja Madrid, DZ Bank and HSBC was priced at the tight end of the 85bp-90bp guidance.

London, Clifford Chance 2-day conference

Pfandbriefbank schweizerischer Hypothekarinstitute is preparing to execute a series of private placements. Instead of the usual investor base, the investors will be Swiss banks, mainly the cantonal banks, which will bid for them.

Fitch yesterday (Tuesday) affirmed the AAA rating of Bank of America’s covered bonds, of which around $9.4bn (Eu7.4bn) are outstanding.

Fitch today (Wednesday) proposed changes to its assessment of liquidity risks within covered bond programmes, which would tighten the link between a covered bond rating and that of the issuer, to be expressed via higher Discontinuity Factors, and would also require higher overcollateralisation to be consistent with a given rating scenario. The proposed updates to the agency’s methodology come just over a month after Standard & Poor’s proposed changes to its covered bond rating criteria that have been widely criticised.

Caixanova has finally opened books on its first government-guaranteed issue, albeit at the widest spread yet for a Spanish issue. Meanwhile, Dexia and Lloyds yesterday (Tuesday) set new benchmarks for size in the government-guaranteed asset class.