Europe

Fitch on Monday added four classes of triple-A rated multi-cédulas to a list of 48 that it has kept on negative review since placing them there in February. Five notch downgrades could follow for the majority of transactions under review in the absence of remedial action, according to the rating agency.

Demand from domestic and German accounts enabled Austria’s Bank für Arbeit und Wirtschaft to today (Tuesday) negotiate a difficult market backdrop to launch a Eu500m five year deal, while a Bank of New Zealand inaugural euro issue is scheduled for launch tomorrow and Caja Madrid has released the spreads for new issues and a cédulas tap being launched as part of an exchange offer.

Greece’s Piraeus Bank is setting up a covered bond programme that will provide for direct issuance if a group of bondholders agrees to amend negative pledge conditions, according to an official at the bank.

Fitch downgraded mortgage backed covered bonds issued by Spain’s Bankinter from AAA to AA+ on Friday, following a downgrade of the issuer the day before.

New euro benchmark covered bond supply appears on course to hit the market tomorrow (Tuesday) as issuers continue with preparations for deals despite a backdrop of uncertainty about whether or not a bail-out of Ireland will be set in motion.

Fitch downgraded Spain’s Bankinter from A+ to A, on negative outlook, yesterday (Thursday), because it believes the bank remains dependent on wholesale funding, a reliance that puts pressure on its liquidity and profitability.

Fitch downgraded covered bonds issued by Greece’s Alpha Bank off a direct issuance programme from A to A- yesterday (Thursday), and today withdrew ratings of Alpha covered bonds launched off an indirect issuance programme.

Bank of New Zealand is said to have met with investors in connection with a possible euro issue, thereby adding to a list of issuers that are roadshowing new programmes and/or preparing inaugural euro market issuance. The stage is set for a record number of debuts in any one month, but a bout of turmoil in the eurozone sovereign debt markets this week means that borrowers and investors will be taking a cautious approach to new business.

Finland’s Aktia Real Estate Mortgage Bank today (Thursday) launched a Eu500m three year issue that slotted into a slipstream created by an inaugural Nordea Bank Finland deal sold on Tuesday, while a Bank für Arbeit und Wirtschaft PSK mandate became the latest addition to a growing deal pipeline.

Caja Madrid and Bancaja yesterday (Wednesday) launched an exchange offer that includes an opportunity to swap covered bonds issued by the borrowers, which together with five other savings banks are forming a new alliance, into government guaranteed securities, senior unsecured notes and/or cédulas hipotecarias to be issued by Caja Madrid.

In brief: Lloyds TSB Bank has become the third UK issuer to announce that it has amended a covered bond programme to allow for the issuance of registered covered bonds.

Euro benchmark covered bond supply slowed to a lone tap from Bayerische Landesbank today (Wednesday), although the pipeline of roadshows grew with the addition of a mandate from the UK’s Clydesdale Bank. Nordea Bank Finland yesterday priced a Eu2bn five year inaugural deal that appears to be the biggest Finnish benchmark covered bond ever.