Germany

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.

Moody’s on 21 December put HSH Nordbank’s A2 rating on review for downgrade, possibly of more than one notch, because it is concerned that potential sources of external support may diminish.

Issuers are limbering up to launch the first benchmark covered bonds of 2010, with three institutions having mandated for transactions that could hit the market this week and others busy with preparations.

Moody’s put the A2 ratings of WestLB and WestLB Covered Bond Bank on review for possible downgrade yesterday (Tuesday), anticipating that the bank will gradually become less systemically important.

Münchener Hypothekenbank was downgraded from Aa3 to A1 by Moody’s yesterday (Tuesday), on concerns over the bank’s capacity to absorb potential losses given a shift towards riskier commercial real estate lending in recent years.

Deutsche Hypothekenbank, Hannover, has appointed Jürgen Allerkamp chairman of the management board. The bank has also announced the departure of two board members, including Jürgen Grieger, former president of the Association of German Mortgage Banks.

Fitch affirmed the AAA rating of Deutsche Pfandbriefbank’s public sector Pfandbriefe on Friday and removed it from rating watch negative following a review of the issuer’s cover pool and an increase in overcollateralisation.