Covered Bonds

The Canadian Bankers Association (CBA) earlier this month submitted a proposal for a covered bond legislative framework to the Canadian government.

Bankinter today (Wednesday) became the fourth Spanish bank to tap the government-guaranteed market. Elsewhere there has been little activity in the financial institutions market this week, although Standard Life Bank also launched a government-backed transaction today, in sterling.

The Swiss government has approved an amendment to the regulations governing the country’s two Pfandbrief institutions that broadens the definition of eligible capital, thereby allowing them to issue more Pfandbriefe and boost liquidity in the interbank market.

Aareal Bank has applied to the German financial markets stabilisation fund (SoFFin) and will receive support in the form of a capital injection and a guarantee facility.

Kookmin Bank has dropped ING and Barclays Capital as leads for its planned covered bond and hired HSBC after becoming impatient with the time it was taking to structure a deal.

Banco Popular yesterday (Monday) became the third Spanish issuer to price a government-guaranteed transaction, a Eu1.5bn three year bond that achieved the tightest level so far for the Spanish government-backed asset class. Supply of Spanish guaranteed debt looks set to continue, with a fourth Spanish bank today (Tuesday) announcing a mandate for its debut.

A warning from Louis Hagen, executive director of the Association of German Pfandbrief Banks (vdp), that Standard & Poor’s proposed new covered bond rating methodology would damage the asset class was just one criticism levelled at the rating agency at an LBBW covered bond conference in Mainz on Friday. But S&P mounted a robust defence of its plans and suggested that issuers be more willing to embrace structured finance techniques.

Ahorro Corporación Financiera (ACF), which runs the AyT Cédulas Cajas programme, and the Confederation of Spanish Savings Banks (Ceca) are setting up structures for pooled government guaranteed issuance by Spain's savings banks, which are eligible for up to around Eu50bn of guarantees under the Spanish scheme.

Banco Popular Español today (Monday) tapped the market with its debut government-guaranteed deal, the third from Spain, and will price the paper inside the levels achieved by La Caixa and Caja Madrid.

Moody’s on Friday concluded a review for possible downgrade of Danske Bank’s rating by cutting the bank by two notches from Aa1 to Aa3, with a stable outlook.

Moody’s today (Monday) downgraded Lloyds TSB and Bank of Scotland, with Lloyds TSB losing its Aaa rating.

The Association of German Pfandbrief Banks (vdp) is optimistic about the prospects for Pfandbriefe this year, citing the success of the two jumbo Pfandbriefe issued at the beginning of this month and healthy new issuance levels since the start of the new year at a presentation in Frankfurt today (Monday).