Austria

Moody’s cut public sector-backed covered bonds issued by Kommunalkredit Austria from Aaa to Aa1 today (Friday) and placed them on review for further possible downgrade while it assesses a proposal from the issuer to increase “committed” overcollateralisation levels.

Issuers pricing transactions yesterday (Tuesday) adopted flexible approaches to timing and execution, and representatives of CIF Euromortgage and Eurohypo told The Cover that they were happy with the end results in light of market conditions.

The hectic pace of issuance in the covered bond market was maintained today (Tuesday), with three new deals following four yesterday, but issuers had to make do with smaller sizes and wider spreads.

The covered bond market had one of its busiest ever sessions this (Monday) morning, with four institutions making the most of an issuance window despite overall sentiment remaining fragile.

Austria’s Bawag PSK and France’s Crédit Mutuel Arkéa finish covered bond roadshows today (Friday), and will early next week assess investors’ feedback to see if new issues makes sense.

Hopes that benchmark covered bond issuance could restart next week have been reined in after reports that French president Nicolas Sarkozy threatened to pull out of the euro-zone contributed to renewed volatility today (Friday).

Austria’s Bank für Arbeit und Wirtschaft (Bawag) and Norway’s Sparebanken Vest Boligkreditt today (Wednesday) announced that they will go on covered bond roadshows in the week of 17 May, although because of market volatility the new issue market remains closed.

Moody's will not give any economic value to non-EEA assets outside Switzerland, the US and Japan in German cover pools, but will continue to give full value to Swiss collateral backing Austrian and German covered bonds, the rating agency said yesterday (Tuesday).

UBS this (Wednesday) morning launched a Eu1.25bn 12 year transaction that will conclude what, according to Dealogic, has been the busiest quarter in the history of the benchmark covered bond market. Meanwhile, an Austrian issuer is preparing to return to the market after an absence of almost five years.

A positive reception for Erste Group’s inaugural public sector benchmark covered bond demonstrated that perceptions of Austrian credit have moved on after a period of negative headlines, a syndicate official at one of the leads told The Cover. Meanwhile, Dexia wrapped up its forth benchmark covered bond of the year.

Deals for Dexia Kommunalbank and Erste Group got the primary market off to a strong start this (Tuesday) morning, with both issues oversubscribed and executed swiftly. Further issuance is expected this week, with SNS Bank already sounding out a new issue.

Moody’s cut public sector unguaranteed covered bonds issued by Hypo Alpe-Adria-Bank International from Aaa to Aa1 yesterday (Wednesday) following a downgrade of the issuer’s rating from Baa1 to Baa2 last Friday (4 December).