France

Caisse de Refinancement de l’Habitat sold a Eu1.2bn 10 year covered bond yesterday (Wednesday), taking advantage of a back-up in yields prompted by an easing of the Greek crisis.

Standard & Poor’s has revised the outlook on Dexia Crédit Local’s A rating from stable to negative because it expects the institution’s funding costs to rise over the next two years as it will no longer benefit from a government guarantee for any new debt issues.

Optimism that the nadir of the Greek crisis has passed helped Caisse de Refinancement de l’Habitat and Eurohypo launch successful benchmark covered bonds this (Wednesday) morning.

Benchmark supply is expected to be thin on the ground this week, even though some institutions have concluded preparations for covered bond issuance. But while blackouts and an unpredictable sovereign market might stymie euro supply, bankers have not ruled out shorter dated issuance from core jurisdictions.

Standard & Poor’s yesterday (Thursday) affirmed its AAA ratings of Dexia Municipal Agency’s obligations foncières and WestLB’s public sector Pfandbriefe. However, WestLB’s Pfandbriefe would lose their triple-A rating if the issuer were downgraded by one notch.

Société Générale SCF yesterday (Wednesday) priced the tightest 12 year benchmark covered bond since the onset of the financial crisis, a transaction that a lead syndicate official said showed good demand for strong names and jurisdictions despite volatility in parts of the sovereign market.

Société Générale SCF has closed the order books on a 12 year public sector benchmark that will be priced later today (Wednesday), becoming the first issuer to sell a deal this week as blackout periods and challenging market conditions have kept others at bay.

Canadian Imperial Bank of Commerce priced the first US-targeted benchmark covered bond in two-and-a-half years on Wednesday, a $2bn (Eu1.42bn/C$2.12bn) three year transaction that attracted more than $4bn of orders, and the deal is said to have generated enquiries from European issuers as to what is now feasible in the US.

Standard & Poor’s downgraded the first covered bond programme under its revised rating methodology yesterday (Thursday), cutting NIBC’s covered bonds from AAA to AA. The rating was withdrawn at NIBC’s request. Meanwhile S&P affirmed GCE Covered Bonds’ and Société Générale SCF’s programmes at AAA.

GCE Covered Bonds, which yesterday (Tuesday) priced its second benchmark covered bond, will continue as an issuer until the BPCE group it is a part of has set up a société de financement de l’habitat (SFH) to operate under new French legislation, an official at GCE told The Cover.

GCE Covered Bonds has closed the order books for a three year benchmark that will be priced at the tight end of revised guidance later today (Tuesday). Swedish Covered Bond Corporation could be the next issuer to follow, having announced a mandate for a five year deal.

Aareal Bank was first into the covered bond market this (Monday) morning, opening books on a Eu500m five year mortgage Pfandbrief. Meanwhile, Groupe Caisse d’Epargne is building a shadow order book for its first benchmark since September 2008 and a handful of other issuers have announced mandates.