Americas

Bank of Montreal is confident that it can repeat the success Royal Bank of Canada enjoyed with its debut when it becomes the second issuer of Canadian covered bonds in the new year. The bank told The Cover that it was encouraged by the reception given to RBC’s inaugural issue.

Bank of Montreal will early next year become the second Canadian covered bond issuer after Royal Bank of Canada, having today (Monday) announced that it has mandated Bank of Montreal Capital Markets, HSBC, Morgan Stanley, Société Générale and UniCredit for its inaugural covered bond.

Washington Mutual spreads ballooned again this (Thursday) morning on the back of a 17.3% fall in its share price yesterday (Wednesday), as concerns about its financial performance and the impact of the New York attorney general’s investigation into mortgage appraisals grew.

The ECBC’s “eight-to-eight” committee of the leading market-makers and issuers this (Friday) morning discussed market-making in Washington Mutual covered bonds in light of New York Attorney General Andrew Cuomo’s announcement yesterday that his office is suing First American Corp for allegedly colluding with WaMu to inflate mortgage appraisals, which had caused its spreads to widen sharply in early trading. However, the committee of leading market-makers and issuers said that the issue was outside of its remit and said that dealers should take up the issue with WaMu.

Leading issuers including Bank of Scotland and Depfa called for a greater commitment to the product from broker-dealers in New York if the covered bond market is to build on the foundations that they laid in the US early this year.

As a follow-up to yesterday's article on comments by Sheila Bair, chairman of the Federal Deposit Insurance Corporation, today we have posted clips of her speech on The Cover.

Panellists at the II Covered Bond Summit in New York on Monday including representatives of Bank of America and Washington Mutual were bullish about the potential for covered bonds to take hold among US financial institutions given the increased spread between covered bonds and other funding instruments that has resulted from the recent turmoil.

Joshua Friedberg, director and portfolio manager at BlackRock, painted a bleak picture of the future for covered bonds in the US yesterday (Monday) at the II Covered Bond Summit in New York. He said that rather than behave as a rates product as they had been marketed to US investors, covered bonds had suffered from illiquidity in the recent market turmoil and should pay a liquidity premium that might make 144A issuance prohibitively expensive for European issuers.

Royal Bank of Canada (RBC) priced its debut Eu2bn five year covered bond at 10bp over mid-swaps this (Tuesday) morning, at the tight end of the 11bp over mid-swaps area guidance.

Sheila Bair, FDIC chairman, gives the regulator's take on the covered bond market.

Sheila Bair, FDIC chairman, takes further questions, beginning with Louis Hagen of the Association of German Pfandbrief Banks.

Sheila Bair, FDIC chairman, takes questions, beginning with Bert Ely of Ely & Company.