Europe

A draft amendment to Germany’s covered bond legislation that was passed by the government last Wednesday has been welcomed by market participants because it clarifies the legal status of the cover pool and its administrator, thereby mitigating refinancing risks.

Bancaja today (Monday) became the seventh Spanish issuer to tap the benchmark covered bond market in eight working days, while Portugal’s Banco Santander Totta is following through with a deal announced before Fitch last Wednesday cut its sovereign’s rating. Meanwhile, an Italian bank will soon be on the road.

Moody’s has concluded a review of its criteria for Greek structured finance and covered bond transactions by leaving open the possibility of them to achieving Aaa ratings.

Sweden’s covered bond issuers have agreed on a single calculation and presentation of loan-to-value ratios for mortgage cover assets to enhance the transparency and comparability of their cover pools.

In an exception to its covered bond rating criteria, Fitch yesterday (Thursday) downgraded Caixa Geral de Depósitos’s public sector covered bonds from AAA to AA+ because of its cut in the Portuguese sovereign’s rating from AA to AA- on Wednesday.

Banco Santander Totta is understood to be considering whether to proceed with launching a covered bond early next week, with market participants discussing the pros and cons of issuance not only for the Portuguese bank, but also for Spanish banks that have been rushing to market.

Bankinter today (Thursday) launched a Eu1bn three year deal that is the seventh cédulas transaction in as many days, including taps, while a downgrade of Portugal’s rating by Fitch yesterday (Wednesday) has been an extra factor for Banco Santander Totta to consider as it approaches the market.

The German government yesterday (Wednesday) approved a draft amendment of the country’s Pfandbrief legislation that is due to come into effect at the end of October.

Representatives from the mortgage industry discussed the UK authorities’ approach to improving the funding environment for lenders at a conference yesterday (Wednesday) where a new industry body, the Mortgage Funding Group, was launched.

Banco Bilbao Vizcaya Argentaria is today (Wednesday) in the covered bond market with the week’s ninth deal, after Deutsche Postbank earlier today priced a Eu1bn 10 year Pfandbrief that took supply of Eu500m-plus issues to Eu5.2bn over the first three days of the week. Meanwhile, Portugal’s Banco Santander Totta has announced plans to tap the market.

Standard & Poor’s yesterday (Tuesday) affirmed the AAA ratings of public sector covered bonds issued by Westdeutsche Immobilienbank and of mortgage covered bonds issued by Deutsche Postbank. WestImmo’s Pfandbriefe are on negative outlook as their rating benefits from the highest possible uplift from the issuer rating.

Banco Popular Español, OTP Mortgage Bank, Swedish Covered Bond Corp, and Westdeutsche Immobilienbank are all in the market today (Tuesday) with covered bonds. Syndicate officials said that the market was receptive, although only one issue has had pricing at the tight end of guidance confirmed.