Covered Bond Opinion

There is a new boy band set to hit the airwaves, called the EM Syndicate Managers, don’t you know. The revelation came from one of the strapping young lads seen in a photo sent to EuroWeek featuring three of EM’s finest in a very boyband pose.

Despite long being lauded as one of the very few effective private sector solutions for wholesale mortgage funding, covered bonds are not quite so divorced from the state as they might seem. Strong implied state support is clear in the most longstanding regime — a pattern that is likely to be replicated in others.

The UK government’s new liquidity scheme will do no harm. But nor is it likely to stimulate much economic growth.

When a crisis looks like it is approaching its peak, a bit of solidarity never goes amiss. The sight this week of François Hollande standing alongside Mario Monti in a joint call for growth-promoting policies to balance the austerity drive might have well have rankled in Berlin, particularly as common eurozone bonds were also on their agenda.

Germany v Holland, or Covered v ABS?

With its pockets empty, the Spanish government could find that subscribing to contingent capital in failed banks is better than becoming a long term equity investor in that least favoured of sectors.

What’s blue, white and red all over?

A bit of movement on the syndicate front is always great news — and isn’t it amazing that these hires often take place in June so that movers can enjoy three months of summer?

The suggestion that Bankia hit the ECB’s discount window for capital every three months is laughable. But it shows that if Spain is going to bail out its banks, it needs outside help.

A Roman-tic New Year’s