Germany

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.

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.

Aareal Bank yesterday (Monday) priced a Eu500m five year mortgage-backed Pfandbrief at 20bp over mid-swaps, tighter than any benchmark covered bond this year.

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.

Fitch yesterday (Thursday) placed on Rating Watch negative (RWN) the mortgage Pfandbriefe of eight German banks and maintained a negative review on another’s over what it higher risk in commercial real estate lending and limited collateral information. The Association of German Pfandbrief Banks (vdp) has called the timing of the rating action “incomprehensible”.

Standard & Poor’s will no longer rate Landesbank Baden-Württemberg’s Pfandbriefe or other debt after the German bank ended its contract with the rating agency. The covered bond issuer is believed to be the first to have done so since S&P announced its controversial new rating methodology on 16 December.

Deutsche Pfandbriefbank yesterday (Monday) built a Eu1.1bn order book for its third benchmark covered bond since the restructuring of Hypo Real Estate Group, a Eu1bn seven year public sector Pfandbrief. The level of oversubscription was not particularly high, the issuer told The Cover, but investor demand was strong enough to allow Pfandbriefbank (pbb) to hit its target.

Three issuers announced mandates this (Monday) morning, ensuring that the pipeline remains bulging even after three issuers closed books on new issues, as the pace of supply showed no sign of relenting in the second week of the new year.

Next week promises to be as busy as this week’s record opening to a year, with two more issuers having officially announced plans for benchmarks in the past 24 hours on top of three outstanding mandates. Supply of Eu5.5bn yesterday (Thursday) took the week’s total to Eu10.25bn from seven deals, just short of the eight totalling Eu11bn in the busiest ever week for the covered bond market at the end of September.

Preparations for a new Pfandbrief for Dexia Kommunalbank Deutschland that began in December came to fruition yesterday (Tuesday) as the issuer priced a Eu1.25bn seven year benchmark, fulfilling its intention of coming to market in early 2010 if market conditions were supportive.

Bankers said that Banco Bilbao Vizcaya Argentaria turned over a new leaf with the first Spanish covered bond of the year today (Tuesday), a benchmark transaction that – like deals for BNP Paribas and Dexia Kommunalbank Deutschland – is set to be priced at the tight end of guidance on the back of an oversubscribed order book. The trio of deals mark the reopening of the jumbo market in 2010.