Covered Bonds

The House Financial Services Committee is set to hold hearings into covered bonds next year, according to sources in Washington, with momentum behind the product in the US having been given renewed impetus by the bailout of Fannie Mae and Freddie Mac.

Lloyds TSB has set up three companies typical of those established by UK financial institutions working on covered bond programmes, suggesting the bank is preparing to enter the market.

Achmea Hypotheekbank's Eu10bn covered bond programme failed its asset cover test (ACT) on five separate occasions between its first deal in February 2007 and July this year due to calculation errors. The bank has now acted to rectify the problem, which is believed to be the first time a covered bond has suffered such a lapse.

In brief: Pfandbriefbank schweizerischer Hypothekarinstitute found demand focused at the short end when it came to market with a Sfr340m dual tranche bond this week.

In brief: Deutsche Kreditbank has joined the Association of German Pfandbrief Banks, effective 1 August.

The move by a handful of Korean banks to sell covered bonds is picking up pace, but there are still a few hurdles that need to be cleared before they reach the finish line. One issuer has already had to return to the starting blocks after its first structuring ideas proved to be a false start.

Leeds Building Society yesterday (Wednesday) became the second building society in a week to set up a covered bond company, Leeds Covered Bonds Holdings Limited.

Unfazed by the new realities of a covered bond market characterised by wider spreads, Groupe Caisse d’Epargne moved quickly to take advantage of a window of opportunity when it saw one to launch its debut issue on Monday. The issuer told The Cover that while conditions might not be ideal, there is no guarantee they will get any better.