Covered Bonds

Not for the first time this month, analysts have been trying to get to grips with Moody’s rating actions, this time the downgrade of Depfa ACS Bank’s public sector covered bonds and Hypo Real Estate Bank International’s mortgage Pfandbriefe yesterday (Tuesday). Affecting more than Eu50bn of outstanding covered bonds, the downgrades are the most significant in the market since the crisis struck in summer 2007, but one analyst even called them irresponsible.

In brief: DnB Nor today (Tuesday) detailed its capacity to access the new liquidity measures announced by the Norwegian ministry of finance at the weekend.

The German government committed to safeguarding the functioning of the Pfandbrief market should this become necessary when announcing its rescue package for German banks yesterday (Monday).

In brief: As The Cover was going to press, Moody’s was announcing downgrades to two classes of covered bonds of Hypo Real Estate group, including Depfa. It cut Depfa ACS Bank’s public sector asset covered securities from Aaa to Aa1 and HRE Bank International’s mortgage Pfandbriefe from Aa2 to Aa3.

Following the collapse of the original photo gallery last Friday, The Cover put together a rescue package over the weekend and today (Tuesday), in line with current trends, presents a less sophisticated version.

Cautious optimism followed this weekend's progress at G7 and EU levels on stabilising the global banking infrastructure, but it will be some time yet before any liquidity that begins flowing through the system reaches the primary markets. And bankers also said that a sceptical and nervous investor base is yet to be convinced by the guarantees that are being applied to an increasingly broad range of debt.

Storebrand Kredittforetak on Friday issued the first tranche off a new five and a half year fixed rate covered bond of up to Nkr2bn with a yield of 5.95% per annum. The issue is the Norwegian institution’s fourth under a programme that was established in the spring of this year.

In brief: Fitch on Friday downgraded NIBC Bank NV’s rating from A- to BBB+. The outlook on the rating was moved from negative to stable.

Wally Höfer-Neder, head of European covered bond origination at Deutsche Bank and one of the best known characters in the market, has left the bank for health reasons.