Europe

The UK Treasury has said that covered bonds are not an acceptable asset for liquidity buffers, arguing in a submission on CRD IV that the crisis has shown that they are not “resiliently liquid instruments”. Among other EU authorities to respond to the European Commission, only the Maltese adopt a similar position.

Moody’s this (Friday) morning downgraded National Bank of Greece from A2 to A3, after cutting the Greek sovereign rating similarly yesterday (Thursday).

Standard & Poor’s yesterday (Thursday) affirmed public sector-backed covered bonds issued by Deutsche Postbank at AAA and removed them from its review list.

Caisse de Refinancement de l’Habitat and Dexia Kommunalbank Deutschland launched Eu500m five year covered bonds this (Thursday) morning.

La Caixa built a modestly oversubscribed order book for a Eu1bn three year public sector-backed deal yesterday (Tuesday) that has been the only benchmark covered bond issuance so far this week, with the pace of supply slowing markedly in comparison with previous weeks.

La Caixa launched a three year public sector covered bond this (Tuesday) morning at levels wider than those discussed last week to take into account an underperformance of Spanish government bonds since then. Only one publicly announced mandate remains in the pipeline, with volcanic ash potentially disrupting preparations for further supply.

La Caixa is expected to launch a cédulas territoriales transaction tomorrow (Tuesday), with benchmark covered bond issuance absent so far today in markets where risk appetite has reduced, partly unsettled by the levelling of fraud charges against Goldman Sachs.

Standard & Poor’s removed 10 covered bond programmes from review after affirming their ratings at AAA on Friday, but downgraded five programmes and these remain on review. The actions were taken on the last day of a four month period by the end of which S&P said it aimed to have resolved all 98 ratings it placed on review in December after introducing a new methodology.

Intesa Sanpaolo yesterday (Thursday) launched the first benchmark off its public sector covered bond programme, a Eu2bn seven year deal that surpassed the size initially targeted by the issuer, and will now focus on readying a mortgage-backed programme for issuance in the coming months. Meanwhile, Caisse de Refinancement de l’Habitat added Eu800m to a 3.75% 2020 issue and La Caixa today announced a mandate.

Intesa Sanpaolo has launched its inaugural covered bond, a Eu2bn seven year Italian public sector deal that will be priced at 50bp over mid-swaps, in line with guidance, later today (Thursday). Meanwhile, France’s Caisse de Refinancement de l’Habitat has reopened a 2020 issue and Spanish savings bank Caja Murcia is on a roadshow.

Helaba yesterday (Wednesday) priced a Eu1bn seven year public sector Pfandbrief issue flat to agencies after building an order book that was more than five times oversubscribed. The issuer told The Cover that its return was prompted by a convergence of spreads available in the international and domestic markets.

Dexia Municipal Agency took advantage of its own and others’ redemptions to sell its third benchmark covered bond of the year yesterday (Tuesday), a Eu1bn five year obligations foncières issue.