Germany

A Eu500m four year mortgage Pfandbrief for Corealcredit launched yesterday (Wednesday) faced two main challenges – a non-jumbo size and a BBB- issuer rating – but, according to a syndicate official at one of the leads, these were overcome, allowing the deal to be priced at an attractive level for the issuer.

Compagnie de Financement Foncier has closed books on a Eu1.5bn long two year deal, which will be the shortest dated and tightest benchmark covered bond to be priced this year. Meanwhile, Corealcredit will shortly close books on a four year mortgage Pfandbrief, and levels wider than where a Bankinter benchmark was priced yesterday (Tuesday) are being whispered for a forthcoming Caja Madrid cédulas issue.

A requirement that German Pfandbrief issuers hold enough liquid assets to cover a liquidity mismatch of up to 180 days, which came into effect on November 1, has helped avert rating downgrades of mortgage Pfandbriefe under Fitch’s new covered bond liquidity risk criteria, said the rating agency yesterday (Tuesday).

Eurohypo yesterday (Monday) priced its fourth and tightest mortgage-backed benchmark this year, a Eu1bn long five year jumbo sold at 25bp over mid-swaps. The issuer told The Cover that a sounding exercise on Friday served its intended purpose of price discovery given that it has no crystal ball.

Eurohypo launched a Eu1bn long five year mortgage-backed Pfandbrief this (Monday) morning that will be priced at 25bp over mid-swaps, the middle of guidance that was set wider than initial levels investors were presented with on Friday. Only one issuer is widely expected to follow it into the primary market this week.

Eurohypo is preparing to launch a long five year mortgage Pfandbrief issue that is being sounded in the low 20s over mid-swaps area, although not everyone is yet convinced of the level.

Deutsche Pfandbriefbank this (Thursday) morning priced only its second jumbo since the Hypo Real Estate group was bailed out in September 2008, a Eu1bn 10 year public sector Pfandbrief launched the day after the German government’s squeeze-out of minority shareholders came into effect.

Deutsche Pfandbriefbank launched a 10 year public sector Pfandbrief this (Wednesday) morning that is the first German supply since the issuer came to market on 8 September.

Fitch is reviewing its assumptions for assessing the credit quality of commercial mortgage loans backing covered bonds, and has kept or placed mortgage-backed covered bonds issued by nine German banks under analysis pending implementation of these revised assumptions.

Moody’s yesterday (Tuesday) downgraded Deutsche Hypothekenbank’s long term debt rating from Aa3 to A1.

Landesbank Berlin has launched a second issue of mortgage-backed covered bonds off its Daheim 1 programme, one of two LBB structured covered bond programmes.

Deutsche Pfandbriefbank this (Tuesday) morning launched a Eu1.5bn five year mortgage-backed Pfandbrief that will be priced at 50bp over mid-swaps, the tight end of guidance, after around Eu4.5bn of orders were registered for the first benchmark from the Hypo Real Estate group since it was bailed out by the German government in September last year.