Americas

Witnesses at the House Financial Services Committee hearing on covered bonds today (Tuesday) are set to support moves to introduce covered bond legislation in the US, but there does not appear to be a consensus as to how broad the range of assets eligible as collateral should be.

Moody’s has endorsed legislation proposed by Congressman Scott Garrett a day before the House Financial Services Committee will hold a hearing on the prospects for covered bonds in the US.

Ahead of Tuesday’s House Financial Services Committee hearing, Congressman Scott Garrett spoke exclusively to The Cover’s Neil Day yesterday (Thursday) about his push for the development of a US covered bond market and the chances of legislation being passed. Read the full interview here.

Congressman Scott Garrett told The Cover yesterday (Thursday) that he is optimistic that covered bonds can gain bipartisan support and also overcome the concerns of the Federal Deposit Insurance Corporation, in an exclusive interview before next Tuesday’s House Financial Services Committee hearing.

Canadian Imperial Bank of Commerce is in the market today (Tuesday) with the first non-domestic currency Canadian covered bond of the year, a debut, two tranche Swiss franc issue.

We don’t normally do this but, hey, it’s nearly Christmas: this Washington Post story on Neel Kashkari – former assistant Treasury secretary, TARP czar, and lead official on the last administration’s covered bond push – is too good to miss.

Howard Goldwasser, formerly of Allen & Overy, has joined Curtis, Mallet-Prevost, Colt & Mosle as a partner in the firm’s New York office.

A commitment to hearings on covered bonds from Barney Frank, chairman of the House Financial Services Committee, two weeks ago promised the biggest breakthrough for the asset class in the US in 18 months, but the detail of the legislation proposed by congressman Scott Garrett that elicited Frank’s statement was of a similarly game-changing nature. The Cover spoke to market participants about what such legislation would mean for the development of covered bonds in the US.

Barney Frank, chairman of the House Financial Services Committee, on Wednesday committed to a hearing on covered bonds in December in response to Republican congressman Scott Garrett’s proposed amendment to the Financial Stability Improvement Act of 2009.

Bank of America’s covered bond programme was downgraded from Aa1 to Aa2 by Moody’s yesterday (Tuesday), after the bank decided against increasing the amount of committed overcollateralisation to a level consistent with a Aa1 rating.

Royal Bank of Canada last week demonstrated that there is domestic support for the covered bond product by pricing the first Canadian dollar denominated covered bond launched by a Canadian bank. Such evidence of a domestic investor base should serve to strengthen future covered bond offerings by RBC and its peers in other markets, and may attract international issuers to the Canadian market, bankers told The Cover.

Royal Bank of Canada yesterday (Thursday) became the first Canadian bank to sell a Canadian dollar denominated covered bond when it priced a C$750m five year issue. The transaction has left covered bond bankers in Europe puzzling over RBC’s rationale for the initiative, citing pricing that offered limited savings compared to senior unsecured debt.