Austria

Moody’s yesterday (Thursday) placed on review for downgrade the Aaa rating of Kommunalkredit Austria’s public sector covered bonds, three days after the Austrian government nationalised the bank.

The Austrian government yesterday (Monday) nationalised Kommunalkredit Austria, acquiring Dexia’s and VBAG’s stakes in the public sector lender, which is the country’s biggest issuer in the international covered bond market.

The level of support banks can expect from their owners or governments was key to rating actions made by Fitch and Standard & Poor’s in the past 24 hours, as rating actions continued on covered bond-issuing members of groups that have been at the centre of the past fortnight’s emergency rescue packages.

Hypo Investmentbank is eyeing a Eu1bn maximum deal at the short end of the curve for its inaugural jumbo Austrian Pfandbrief, the bank’s head of funding told The Cover ahead of its roadshow later this month.

Hypo Investmentbank AG yesterday (Thursday) mandated Barclays Capital, BNP Paribas and Dresdner Kleinwort to launch the Austrian bank’s inaugural jumbo public sector Pfandbrief.

*Excludes German, French, Spanish and Nordic issuance.

Kommunalkredit Austria priced a Eu1bn four year covered bond at mid-swaps flat this morning, as expected, but while the transaction shows how the most sought after names can avoid the worst of the spread widening, questions remain over what whether anything can be printed any tighter.

Kommunalkredit Austria showed the gulf between public sector covered bonds from established, legislative jurisdictions and the mainly structured mortgage issuance this week by coming out with price guidance of mid-swaps flat for a four year deal via Citi, Dresdner Kleinwort and UBS today.

Erste Bank launched its first euro denominated public sector backed covered bond in the international market yesterday (Thursday), a two year floating rate note that was increased from Eu100m to Eu150m and then Eu160m on the back of strong demand.