Americas

Moody’s yesterday (Thursday) placed on review for possible downgrade the long term ratings of Bank of Montreal, citing pressure on the issuer’s profitability.

The Federal Reserve has for the first time assigned US covered bonds their own buckets at its discount window, giving them recognition that had been sought by proponents of the instrument in the US.

Legislation proposed by two congressmen does not, according to Moody’s, address the rating agency’s core concern that the cover pool of outstanding US covered bonds would have to be liquidated within 120 days of a sponsor bank default.

Compagnie de Financement Foncier has begun putting in place the necessary documentation to establish a 144A MTN programme to sell its covered bonds into the US, and is hoping to overcome potential obstacles to its application. Meanwhile, the French issuer yesterday (Thursday) tapped a Swiss franc bond.

Bank of America is considering whether to make changes to its covered bond programme to support its rating, after Moody’s downgraded the covered bonds from Aaa to Aa1.

Jerry Marlatt, who sits on the US Covered Bonds Council steering committee, has left Clifford Chance and joined Morrison & Foerster.

Moody’s yesterday (Monday) changed the rating outlook on Bank of Montreal from stable to negative.

Better than expected first-quarter bank results and unguaranteed bond supply from lower rated financial institutions gave market participants in Europe and the US hope that the market is on the road to recovery this week.

Bank of America’s covered bond programme could be rated as low as Aa2 after a review for possible downgrade that Moody's initiated yesterday (Tuesday). [Amended following a correction by Moody's to the text of its press release.]

Moody’s yesterday (Wednesday) downgraded the senior debt rating of Bank of America NA from Aa2 to Aa3, on stable outlook, concluding a review for possible downgrade that started earlier this month.

Michael Krimminger, special advisor for policy, office of the chairman of the Federal Deposit Insurance Corp, told delegates at IMN's Global Covered Bonds conference in London on Friday that the FDIC hopes that its proposed addition of a collateralised element to the Temporary Liquidity Guarantee Programme could act as a stepping stone to the issuance of covered bonds in the US. But covered bond bankers are skeptical, and think that the term covered bond should be used with caution in the context of the FDIC’s proposal.

Fitch yesterday (Tuesday) affirmed the AAA rating of Bank of America’s covered bonds, of which around $9.4bn (Eu7.4bn) are outstanding.