Germany

Fitch yesterday (Monday) downgraded the long term rating of HSH Nordbank from A to A-, and left it on negative review, in expectation of a reduction in ownership by Hamburg and Schleswig-Holstein.

WestLB will drop its DBRS and Standard & Poor’s ratings and replace them with Fitch ratings, it announced yesterday (Thursday).

Landesbank Baden-Württemberg priced a $500m three year benchmark covered bond in the middle of its 70bp over mid-swaps area guidance yesterday (Thursday). Some market participants questioned the economics of the transaction, but LBBW’s head of funding stressed the strategic value of the Eurodollar issue.

Landesbank Baden-Württemberg is launching the first Eurodollar benchmark covered bond in more than two-and-a-half years, targeting a three year public sector-backed issue of at least $500m (Eu397m), with European and Asian accounts the main audience.

Fitch on Friday downgraded Düsseldorfer Hypothekenbank from A- to BBB- because of a change of ownership, from Bundesverband deutscher Banken to US-based investment firm Lone Star. However, as a Pfandbrief issuer, the bank should benefit from strong systemic support, the rating agency said.

HSH Nordbank yesterday (Monday) priced a Eu500m three year Pfandbrief issue that could well be the last sizeable new issue bought by euro-zone central banks operating under the European Central Bank’s purchase programme, which today (Tuesday) appeared to have passed its targeted Eu60bn. [Amended.]

HSH Nordbank will shortly close books on a Eu500m three year public sector-backed Pfandbrief that was the only sizeable new covered bond in the market this (Monday) morning, with the end of the European Central Bank’s purchase programme injecting some uncertainty into the market.

Eurohypo yesterday (Wednesday) priced a Eu500m four year mortgage-backed Pfandbrief, the fourth sub-Eu1bn deal of six sizeable issues launched this week. Meanwhile, HSH Nordbank plans to access the benchmark covered bond market.

Eurohypo is today (Wednesday) sizeing a four year Pfandbrief at Eu500m, the lower end of a targeted size range, in response to muted demand in a market where Eu4.25bn of supply has hit the market in a day-and-a-half.

Fitch yesterday (Monday) affirmed at AA- and removed from negative review mortgage-backed Pfandbriefe issued by Corealcredit, one of eight issuers whose mortgage covered bonds were placed on Rating Watch negative in January because of concerns over credit risk posed by their commercial real estate exposure and limited information on collateral.

Banca Monte dei Paschi di Siena is taking the place of UBI Banca in reopening the Italian covered bond market, launching its inaugural deal today (Tuesday), but the reopening of the obbligazioni bancarie garantite segment has been badly managed, according to bankers. Meanwhile, four other issues are accessing the market today.

Four covered bond issuers were this (Monday) morning said to be lining up to tap the covered bond market, with the level being floated for a mooted Italian transaction surprising market participants.