Europe

The Bank of Scotland, a subsidiary of the Lloyds Group, has restructured as many as eight covered bonds in an exercise that could be constituted as a preliminary move ahead of potentially issuing into the public market.

Fitch today (Thursday) downgraded public sector covered bonds issued by Portugal’s Caixa Geral de Depósitos from AA+ to AA, because the refinancing costs for public sector cover assets are likely to rise in Portugal, based on a review of the sector that it is currently undertaking.

Benchmark covered bond supply in 2011 is likely to be close to 2010 volumes, according to covered bond analysts, with no analysis forecasting more than a Eu20bn rise or fall relative to 2010 levels.

Fitch yesterday (Tuesday) downgraded Bank of Ireland’s UK residential mortgage covered bond programme and cut Irish covered bonds issued by AIB Mortgage Bank and EBS Mortgage Finance.

A final Nykredit auction on Monday concluded end-of-year auctions of interest-reset mortgage bonds held by Denmark’s mortgage credit institutions for this year. Investor interest was lower than last year, but borrowers look set to benefit from mortgage rates that will be reset to low levels compared with previous years, according to Danske Bank analysts.

The UK Regulated Covered Bond Council has appointed Chris Fielding to a newly created role of chief industry spokesperson for the council as part of a push to promote UK Regulated Covered Bonds, it announced today (Tuesday).

Moody’s on Friday placed on review for possible downgrade covered bonds issued by five Portuguese issuers after placing the issuers’ ratings on negative review the day before.

Moody’s placed Portugal’s covered bond issuers on review for possible downgrade yesterday (Thursday) because of their high reliance on central bank liquidity, the potential impact of planned austerity measures by the Portuguese government, and a more uncertain operating environment.

Fitch today (Friday) cut Allied Irish Banks and Bank of Ireland from A- to BBB, on stable outlook, following a downgrade of the Irish sovereign yesterday.

Following a premature halt to new issuance this year, syndicate bankers expect the onset of 2011 to bring a rush of benchmark covered bond supply as issuers hasten to execute funding plans in anticipation of continued market volatility. A liquid buy-side should ensure that deals are readily absorbed - at least initially.

Jozef Prokeš has joined BlackRock as a portfolio manager to help boost the investment management firm’s covered bond focus.

Anglo Irish Bank Corp Limited yesterday (Tuesday) launched a buyback offer aimed at all remaining outstanding external covered bonds launched under a UK programme, an operation that an official at the issuer described as a “clean-up exercise”.