What on earth is going on in the UK?

Investors could be forgiven for playing it safe with regard to UK covered bonds given the mixed signals coming out of the country. Gloomy news included a damning report on UK mortgage brokers from the Financial Services Authority and a change to negative outlook for Alliance & Leicester’s senior unsecured rating by Standard & Poor’s, but there were rays of hope more directly relevant to covered bond holders from S&P’s report on prime UK RMBS and on Fitch’s covered bond rating for Abbey.