Americas

Canadian Imperial Bank of Commerce recently priced a $2bn (Eu1.42bn/C$2.12bn) three year covered bond issue that was the first benchmark targeted at US investors in two-and-a-half years. The Cover spoke to CIBC about the issue this week, with regulatory reporting restrictions on the deal having just ended.

Royal Bank of Canada yesterday (Monday) sold a C$850m (Eu606m/$826m) five year covered bond, which is only the second domestic Canadian issue and comes just days after plans to introduce legislation were revealed in the country’s budget.

The Canadian government is planning to introduce covered bond legislation, according to the 2010 budget published yesterday (Thursday). [Updates yesterday’s news alert to include reaction.]

Standard & Poor’s has lowered the outlook on Bank of America NA’s rating from stable to negative, in line with a parallel action on Bank of America Corp that the rating agency said reflected increased uncertainty over government support.

Congressman Scott Garrett’s proposals for US covered bond legislation stand to increase the attractiveness of the asset class by removing uncertainties surrounding the treatment of covered bonds in the event of an issuer insolvency, said panellists speaking at a discussion hosted by Sidley Austin in New York on Monday. Garrett also gave some insights into his how his push is progressing.

Canadian Imperial Bank of Commerce priced the first US-targeted benchmark covered bond in two-and-a-half years on Wednesday, a $2bn (Eu1.42bn/C$2.12bn) three year transaction that attracted more than $4bn of orders, and the deal is said to have generated enquiries from European issuers as to what is now feasible in the US.

Swedish Covered Bond Corporation is preparing to price at the tight end of revised guidance a Eu1bn five year issue that was more than twice subscribed, while CIBC met strong demand for the first benchmark covered bond aimed at US investors in two-and-a-half years.

The first US-targeted benchmark covered bond for two-and-a-half years could be launched as early as today (Monday), with non-US issuers said to be testing whether US investors are ready to return to the asset class.

Standard & Poor’s yesterday (Monday) affirmed a further five covered programmes at AAA under its new covered bond rating methodology, taking the number of programmes that have kept their top rating to 11.

Liz Padova Hanson, who was previously head of US covered bond structuring at RBS/ABN Amro, has joined Barclays Capital as a managing director in the bank’s asset securitisation origination business in the Americas.

The global financial crisis has transformed emerging market sovereign risk premiums and debt management tactics. Countries need to tread carefully as they return to external debt markets to meet rocketing financing needs.

Democrat and Republican members of the House Financial Services Committee welcomed an initiative to establish covered bond legislation during a full hearing yesterday (Tuesday), highlighting the contribution the asset class could make towards reviving and growing the US mortgage market without the need for costly government support.