Covered Bonds
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Each month The Cover will now be publishing charts breaking down supply in the covered bond market using data from Dealogic. Today we publish the first. -
Dexia Kommunalbank gave the jumbo Pfandbrief market its first test since inter-dealer market-making commitments were resumed this (Monday) morning. Spreads were wider than on Friday, as expected, but the medium term outlook was unclear.
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Market conditions remain grim this week, but, having been frustrated in their ambitions last week, issuers appear ready to test demand, even if it means taking covered bond spreads to new levels.
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Fitch last night (Thursday) downgraded Washington Mutual’s covered bond programme by two notches, from AAA to AA. The bonds have now been removed from Rating Watch Negative, with WaMu having set a new minimum overcollateralisation level.
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In light of the succession of UK mortgage lenders establishing covered bond programmes over the past year, The Cover spoke to some of the biggest names still absent from the sector to find out if they are preparing to enter the market.
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Hypo Investmentbank AG yesterday (Thursday) mandated Barclays Capital, BNP Paribas and Dresdner Kleinwort to launch the Austrian bank’s inaugural jumbo public sector Pfandbrief.
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Those seeking a simpler structure under which US banks will be able to issue covered bonds directly are confident that a template is nearing completion. However, the end result could be one that continues to differ from European models.
