Covered Bonds

Moody's yesterday (Monday) cut Washington Mutual's covered bond rating from A3 to Baa1, and left it on watch negative, in an unexpectedly swift follow-up on last week's downgrade of the instruments from A2 to A3.

Japanese borrowers’ plans to issue covered bonds have hit something of an impasse because of difficulties in structuring deals under Japanese law as well as a lack of need on the part of issuers to turn to covered bonds for financing.

At a Washington conference on Friday representatives of the Department of Treasury, Congress and potential issuers tackled some of the questions that covered bonds must answer convincingly if they are to take hold among mortgage lenders and investors in the US. And while the Treasury made clear its opinion that the product’s time has come, it was by no means clear that their long term future is assured.

Click here for the latest covered bond pipeline (opens pdf).

Riksbank, the Swedish central bank, has responded to the market turmoil by increasing the amount of covered bonds from a counterparty or an institution with “close links” to it that can be used as collateral in the RIX payment system, it announced today (Monday).

An internal audit by Achmea Hypotheekbank has revealed that some of the mortgages transferred to its covered bond company do not comply with the eligibility criteria stated in the programme prospectus, the bank said yesterday (Thursday).

Moody’s and Standard & Poor’s yesterday (Thursday) announced further rating actions on Lloyds TSB and HBOS following the announcement that the institutions are planning to merge.

Moody’s yesterday (Thursday) downgraded WaMu’s covered bond ratings from A2 to A3.

At this week’s Opportunities in the Italian Funding Market: Securitisation and Covered Bonds conference in Rome, the panel on market-making and liquidity considerations showed that agreement on how the two can be improved is still some way off.

The Bank of England has reversed its hardline stance on the special liquidity scheme and announced that the window will extend another three months until the end of January.