Germany

Société Générale SCF is increasing its recent Eu1.25bn 10 year public sector obligations foncières issue by Eu1bn after encountering strong real money demand for the tap. Meanwhile a rare, if modest and privately placed, dollar issue was executed yesterday (Wednesday).

A Eu125m tap for Eurohypo has been the only jumbo covered bond activity so far this week, with the Easter holidays and competition from other asset classes stymieing new issuance.

Moody's last Thursday placed on review for possible downgrade the mortgage and public sector Pfandbriefe issued by SEB AG.

Fitch last week took rating actions on several major banks following a review of the capacity of high grade sovereigns to support their largest and most systemically important commercial banks. The agency upgraded two German Pfandbrief issuers, but cut the ratings of four entities in the Dexia group.

Landesbank Baden-Württemberg yesterday (Tuesday) tapped its Eu1bn February 2014 Pfandbrief, and Caisse de Refinancement de l’Habitat is today (Wednesday) also taking advantage of a “perfect week” to increase the 10 year Eu1bn issue it priced on 25 March.

Germany’s federal council, the Bundesrat, on Friday approved an amendment to the Financial Markets Stabilisation Law that modifies the German bank guarantee scheme to allow for guarantees of bank debt in maturities out to five years. However, the extension is accompanied by conditions that could limit supply of longer dated government-backed debt, which had been expected to squeeze Pfandbrief issuance.

Moody’s this (Tuesday) morning cut the rating of Skandinaviska Enskilda Banken AB from Aa2 to A1 and that of its German subsidiary, SEB AG, from A1 to Baa1, and left them both on negative outlook.

Standard & Poor’s yesterday (Wednesday) put six members of the Hypo Real Estate group on CreditWatch positive after the German Financial Markets Stabilisation Fund (SoFFin) took a 8.7% stake in the group as a first step to taking control of and recapitalising it. The rating agency said that an upgrade of up to three notches is possible.

The law amending the Pfandbrief Act has come into effect today (Thursday), after it was published in the Bundesgesetzblatt, the official law gazette, yesterday (Wednesday).

Fitch today (Monday) affirmed DZ Bank’s covered bonds at AAA, after the bank took action to compensate for its increased exposure to the German cooperative banking sector.

Eurohypo on Tuesday afternoon priced its first jumbo of the year, a Eu1.25bn five year mortgage Pfandbrief, at 100bp over mid-swaps, the tight end of 100bp-110bp over initial guidance. The issue marked the successful implementation of a three-pronged funding strategy for the Commerzbank group.

Aareal’s debut SoFFin-backed issue has been the highlight of government-guaranteed supply this week, while BNP Paribas is today (Wednesday) adding momentum to a reopening of the unguaranteed senior bank market.