Covered Bonds

Banco Espírito Santo opened books on a new short dated mortgage backed transaction this (Wednesday) morning, apparently refuting suggestions that conditions had turned against a second new benchmark this week. Bankers with outstanding mandates from Italy and Portugal admitted that this turn of events could cause them to readjust their plans, but only if the issuance window can be held open in the face of pressure from the wider financial markets.

Treasury Secretary Henry Paulson reiterated his interest in covered bonds playing a part in the US mortgage market at a Federal Deposit Insurance Corporation conference yesterday (Tuesday). The Treasury has meanwhile followed up its recent Washington gathering with further, more focused discussions.

Dexia LdG Banque could become a regular visitor to the public markets after its debut benchmark this autumn, Véronique Hugues, global head of long term funding at Dexia, told The Cover yesterday (Monday).

Banca Popolare di Milano (BPM) yesterday (Monday) priced the first Eu1bn covered bond since Caja de Ahorros del Mediterráneo’s two year in mid-June. However, market participants said that today’s plummeting equity markets had sunk any hopes of a meaningful recovery.

In brief: The Co-operative Bank is the latest UK financial institution to have turned to covered bonds, setting up The Covered Bond LLP.