Covered Bond Opinion

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

The appointment of external auditors to look at the strength of Spain’s banks is a welcome development. But it will not necessarily resolve investor frustration at Spain’s softly, softly approach towards cleaning up the banking sector.

Attempts to provide investors with regular, standardised and transparent covered bond collateral information are to be applauded. But a fundamental shift in how Spanish banks collect and report data is needed for prospective Cédulas buyers to benefit.

Standard Chartered’s breaking of the Rmb1bn ($158.2m) barrier in ECP sold out of London may seem like small Tsingtao when compared with the size of the market as a whole. But the speed at which the issuer reached the milestone is testament to the flexibility of the ECP product and its ability to adapt, despite the slings and arrows it has faced over the last five years.

There may be only a month to go before a second Greek default and possible exit from the euro. There may even be less time, if the bleeding of deposits from Greek banks becomes life-threatening, and central banks or the Eurozone rescue mechanisms do not stanch the flow.