Covered Bonds

Bank of America NA and Bank of America Corporation were put on review for downgrade by Moody’s yesterday (Wednesday). Bank of America NA is rated Aa2 and its parent A1.

Moody’s downgraded Deutsche Postbank from Aa2 to Aa3 yesterday (Wednesday) and kept the bank on review for further downgrade.

IKB Deutsche Industriebank issued a Eu2bn three year government-guaranteed bond at 45bp over mid-swaps today (Thursday). The pricing took into account IKB's troubles and the anomalies of the secondary market.

The pace of government-guaranteed issuance picked up today (Wednesday), with an Austrian, a UK and possibly a German name joining in. Banks are said to be keen to complete deals ahead of the European Central Bank meeting tomorrow (Thursday).

Spanish and Dutch financial institutions are today (Tuesday) braving the government-guaranteed market after yesterday's turmoil. The two deals are coming wider than recent comparables, but are both understood to be going well.

South African financial institutions are said to be in discussion with their central bank about ways to introduce covered bond issuance in the country, as they seek alternative and higher rated sources of liquidity.

The Finnish government confirmed on Friday (27 January) that it will guarantee bank debt issued up to 30 April that refinances outstanding debt. This means that while covered bonds are theoretically included in the Eu50bn package, none will yet be a part of it.

Standard & Poor's yesterday (Thursday) revised its outlook on Clydesdale Bank from stable to negative.

Dexia is understood to be committed to maintaining its Pfandbrief issuance through Dexia Kommunalbank despite the retrenchment into core markets that the group is planning as a result of its problems.