Euro

Standard & Poor's has rated a Cédulas Hipotecárias programme for Deutsche Bank, giving it the highest possible Cédulas rating in the country. But, despite their unusual nature of the bonds they will not be publically distributed. In an environment where jurisdiction trumps almost everything, the five bonds that have already been issued off the programme will be retained for funding with the ECB.

Deutsche Pfandbriefbank (Pbb) has told The Cover that it is planning to launch at least one more euro benchmark covered bond after the summer break. The borrower has already sold three €500m mortgage backed trades so far this year, and said it could turn to jumbo deals in the future.

CaixaBank has written to its fixed income investors to explain why it has bolstered its emergency liquidity reserves, and the effect that this has had on its balance sheet. Bank treasury officials told The Cover it still has plenty of assets available on its balance sheet and confirmed that overcollateralisation would remain close to historic levels — many times higher than the legal minimum.

New Zealand’s ASB Finance plans to bring annual euro benchmark covered bonds following its successful debut this week. Although happy with the outcome on its first deal, the issuer told The Cover that ASB’s sound fundamentals and the advent of domestic legislation should help tighten spreads for follow-on deals.

Deutsche Pfandbriefbank (Pbb) on Wednesday priced a €500m mortgage backed trade flat to its curve for the second time in just over a month.

ASB Finance launched an inaugural €500m euro benchmark on Tuesday. Pricing was aggressive, said leads, though syndicate bankers away from the trade felt it offered a considerable premium over ASB’s Australian parent, Commonwealth Bank of Australia.

New Zealand’s ASB Finance has picked banks to arrange its an inaugural covered bond, and could launch a five year euro deal as early as Tuesday morning, said syndicate leads. A poor market opening and a European Union summit on Thursday, however, mean covered issuers have only a two day mid-week window in which launch prospective trades.

The results of stress tests conducted by consultancies Oliver Wyman and Roland Berger on Spanish banks are unlikely to improve sentiment on Spanish Cédulas, analysts said on Friday.

The Association of German Pfandbrief Banks (vdp) has responded to Moody’s assertion that its latest transparency initiative has shortcomings. The rating agency said plans to factor sovereign risk into public sector cover pool calculations do not take into account duration risk. But the vdp claims its proposals are already more conservative than those suggested by Moody’s.

There has been plenty of interest in core and even peripheral names in the secondary market this week, especially at the long end, where investors have been tempted by juicy Spanish yields. A briefly negative basis in covered versus CDS spurred interest.

Spanish covered bonds are set to lose the support of bank treasuries and insurance accounts due to ratings triggers. As a result Spanish issuers face a world of credit buyers and senior level spreads as the Cédulas sector slides towards single-A, Crédit Agricole said analysts on Wednesday.

Despite long being lauded as one of the very few effective private sector solutions for wholesale mortgage funding, covered bonds are not quite so divorced from the state as they might seem. As the bank finance market evolves in Europe, is it possible that the implied state support seen in the most longstanding regime is, over time, replicated in other regimes?