Europe

New rules effective 1 October that place an 85% loan-to-value limit on Swedish residential mortgages will strengthen the credit quality of covered bonds backed by Swedish home loans, according to Moody’s.

Fitch downgraded mortgage backed covered bonds issued by Anglo Irish Bank and Anglo Irish Mortgage Bank (AIMB) from AA+ to A yesterday (Tuesday), and kept the programmes on Rating Watch Negative. Meanwhile, Moody’s put several Irish banks on review for downgrade after taking the same action on the sovereign.

Skandinaviska Enskilda Banken will today (Wednesday) price a Eu1bn seven year issue at the tight end of revised guidance after meeting with strong demand for the first Swedish euro benchmark since June. Meanwhile, Italy’s UBI Banca is gauging interest for a new issue, Canadian Imperial Bank of Commerce has opened books for an Australian dollar debut, and a mandate for a debut off an innovative programme has been added to the deal pipeline.

Bank of England executive director Paul Fisher indicated in a speech last week that the Bank is unlikely to be swayed by lobbying for more support for the covered bond market, and distanced the UK central bank’s position from special treatment afforded the asset class by the European Central Bank.

Spain’s Unicaja will today (Tuesday) price a Eu750m five year cédulas hipotecarias issue, more than a marketed Eu500m minimum deal size, although syndicate bankers away from the leads said the deal had at times appeared to struggle. Issuance was otherwise restricted to a tap and floating rate note, although there are rumours of deals in the pipeline and CIBC has mandated for an Australian dollar debut.

Italy’s UniCredit took advantage of a stabilisation of the euro-zone sovereign market to yesterday (Monday) launch a Eu1bn seven year covered bond issue before next week heading into an extended black-out period ahead of a merger of its Italian banking subsidiaries, the issuer told The Cover.

Standard & Poor’s cut mortgage covered bonds (obrigações hipotecárias) issued by Portugal’s Banco Espírito Santo from AAA to A+, on negative outlook, on Friday, before withdrawing its rating at the issuer’s request.

Italy’s UniCredit launched a Eu1bn maximum seven year issue this (Monday) morning that syndicate bankers away from the deal complimented for being “bang-on”, while Spain’s UniCaja is testing investor interest for a Eu500m minimum five year cédulas.

Denmark’s Nykredit Realkredit priced a Eu500m long three year junior covered bond on Friday and the issuer told The Cover that it was pleased with foreign investors’ response to its inaugural euro offering of what represented “senior debt with a twist”.

Supply of sizeable euro covered bonds was this week at its lowest since the benchmark market reopened at the end of August, but activity is expected to pick up again next week, with issuers also said to be preparing for issuance in dollars and niche currencies. Meanwhile, Denmark’s Nykredit Realkredit today (Friday) launched an inaugural euro junior covered bond transaction.

Moody’s has cut the ratings of Depfa plc and Depfa ACS Bank from A3 to Baa3 following a transfer of assets to the Hypo Real Estate’s wind-down entity, FMS Wertmanagement, that the rating agency said is part of a process whereby the Irish entities will be less likely to enjoy support.

Fitch cut mortgage backed covered bonds issued by Spain’s Cajastur from AAA to AA+ and placed them on Rating Watch Negative yesterday (Thursday), because of a downgrade of the issuer the previous day.