Covered Bonds

Dexia Crédit Local today (Tuesday) found its second visit to the government-guaranteed market easier than its first and is set to price its new issue this afternoon. Meanwhile Lloyds TSB found demand from unexpected areas in sterling and OeVAG wrapped up its four year euro.

Moody’s yesterday (Monday) downgraded HSBC Bank plc’s debt and deposit ratings from Aa1 to Aa2 and its financial strength rating from B to C+ with negative outlooks.

Standard & Poor’s on Friday afternoon cut the rating of Caja Madrid’s cédulas hipotecarias from AAA to AA. Although the downgrade is under S&P’s current methodology, the action gives a foretaste of what the rating agency’s proposed new approach could bring. Meanwhile the Spanish banking system continues to suffer negative ratings news.

In brief: Deutsche Bank is laying the groundwork for Pfandbrief issuance backed by mortgages.

Dexia Crédit Local is hoping to win over investors to its three-way guaranteed paper when it comes to market tomorrow (Tuesday), while OeVAG has today (Monday) been negotiating the differences in opinion on Austrian spreads.

Standard & Poor’s downgraded Lloyds TSB and Bank of Scotland’s long term counterparty ratings from AA- to A+ on Friday. Lloyds Banking Group was lowed from A+ to A. All have a stable outlook.

Fitch Ratings on Friday changed from stable to negative the outlook of Sparebank 1 SMN’s and Sparebank 1 Nord-Norge’s long term A ratings and put Sparebank 1 SR Bank’s long term individual debt rating of A on negative watch.

Note: includes debt issued by Société de Financement de l’Economie Française (SFEF)

Five medium-sized Norwegian savings banks have put in place the necessary preparations to issue covered bonds and received approval to swap these with the central bank for government securities under the country’s Nkr350bn (Eu39bn) support scheme.

Österreichische Volksbanken (OeVAG) is planning to issue a four year euro government-guaranteed deal on Monday and is set to pay a chunky premium over recent three year Austrian paper to ensure success.

The Cover is running a league table of bookrunners of government-guaranteed bank debt for the first time today (Friday). We will be publishing a weekly euro league table and other government-guaranteed rankings on an ad hoc basis.

Moody’s put JP Morgan Chase & Co on negative outlook yesterday (Wednesday). It is rated Aa3, but the recession is expected to create high provisions and credit costs for the next four to six months.