Europe

Standard & Poor’s has affirmed its ratings of covered bonds issued by Deutsche Genossenschafts-Hypothekenbank and Finland's OP Mortgage Bank at AAA under its revised methodology.

Stadshypotek and Société Générale today (Tuesday) announced mandates for benchmark covered bonds that market participants said are likely to be launched tomorrow (Wednesday). At least one other issuer is said to be planning to access the market, despite a short working week and reduced investor availability due to the Easter holidays.

In brief: Royal Bank of Scotland has set up a Eu15bn global covered bond programme, which has been approved by the Financial Services Authority for inclusion on its Regulated Covered Bond Register.

UBS yesterday (Wednesday) priced a Eu1.25bn 12 year issue, the biggest deal in the maturity this year. A reverse enquiry from a German insurance company was the initial spark for the transaction, according to a syndicate official at one of the leads.

Moody’s yesterday (Wednesday) downgraded mortgage covered bonds issued by Alpha Bank and National Bank of Greece because of heightened sovereign debt risk in Greece, and affirmed the rating of those issued by Eurobank Ergasias.

Standard & Poor’s yesterday (Wednesday) affirmed mortgage-backed cédulas issued by La Caixa at AAA, on stable outlook, completing for the first time a review of Spanish covered bonds under its new rating methodology.

Fitch yesterday (Tuesday) revised the outlook on Banco Comercial Português and Banco Espírito Santo from stable to negative, but affirmed their ratings and those of Banco Santander Totta and Banco BPI. The rating agency has also affirmed mortgage covered bonds issued by Caixa Geral de Depósitos at AAA.

Despite having fallen short of a Eu1bn target size, Bancaja completed its scheduled benchmark funding for 2010 with the launch of a Eu750m three year cédulas hipotecarias yesterday (Tuesday), an official at the savings bank told The Cover, while other Spanish issuers have yet to access the covered bond market ahead of forthcoming maturities.

The UK government called for further work among building societies towards pooled funding models, including joint covered bonds, in a discussion paper yesterday (Tuesday). Meanwhile, the Council of Mortgage Lenders said that last week’s budget was disappointingly short on detail about government action to help securitisation and covered bond markets.

UBS this (Wednesday) morning launched a Eu1.25bn 12 year transaction that will conclude what, according to Dealogic, has been the busiest quarter in the history of the benchmark covered bond market. Meanwhile, an Austrian issuer is preparing to return to the market after an absence of almost five years.

Bancaja will size a three year cédulas hipotecarias launched yesterday (Monday) below its Eu1bn target and price it at the wide end of guidance, prompting some bankers to suggest that the transaction was a deal too far for the Spanish covered bond market. Meanwhile, UBS has mandated a new issue.

Banco Santander Totta negotiated an unexpected downgrade of its sovereign last week to price a Eu1bn three year obrigações hipotecárias issue yesterday (Monday), the first Portuguese benchmark covered bond in nearly three months.