Covered Bonds

Alistair Darling, the Chancellor of the Exchequer, gave the residential mortgage backed securities market a pleasant surprise yesterday (Monday) when the pre-Budget report (PBR) held out the promise of a guarantee scheme to help restart mortgage funding. Any such scheme would also be applied to covered bonds.

In brief: AyT Cédulas Cajas Global XX has been filed with the Comisión Nacional del Mercado de Valores.

The Securities Industry & Financial Markets Association today (Tuesday) launched the European Covered Bond Dealers Association (ECBDA), which aims to provide a platform for market makers to advocate their position in the primary and secondary markets.

Sparebanken Vest Boligkreditt today (Monday) executed its inaugural covered bond issue, but, like other Norwegian issuance in the past month, it is being retained.

Rating action: After announcing several negative rating actions on UK building societies on Friday morning, Fitch on Friday afternoon affirmed its ratings of related covered bond issues.

Investors’ fears of further writedowns need to be alleviated to help restore confidence in bank credit and hence covered bonds, said panellists at the European Mortgage Federation conference in Brussels last week. They also forecast increasing discrimination between structured and legislative covered bonds.

UniCredit Jelzálogbank Zrt signed a Eu2bn covered bond programme on Friday. The Hungarian bank’s new programme will enable it to issue internationally.

Rating action: Fitch today (Friday) downgraded three building societies and changed its outlook on several others in light of the rapid deterioration of the prospects for the UK economy.

Rating action: Moody’s has downgraded HSH Nordbank from Aa2 to Aa3, on stable outlook, because of a cut in its bank financial strength rating resulting from an increased risk profile and stretched financial profile.

Anyone worried about deteriorating asset quality and the state of European mortgage markets would have felt their spirits lifting during the opening panel of the European Mortgage Federation’s sixth annual conference in Brussels yesterday (Thursday). Representatives from Denmark, Poland, the Netherlands, Germany and Belgium painted a reassuring picture of the state of their country’s mortgage markets.

SoFFin, the German Financial Markets Stabilisation Fund, has blasted the Landesbanks for being too slow in recapitalising themselves and dismissed claims that it is being too slow in providing banks with help.

In brief: Storebrand Kredittforetak has increased and retained its Nkr1.5bn May 2011 issue by Nkr2bn to further build up its unutilised holdings of covered bonds that can be used to access Norges Banks’ liquidity facility.