Germany

Landesbank Baden-Württemberg is attempting to overcome some of the hurdles in selling covered bonds in the primary market by auctioning Pfandbriefe on a weekly basis to institutional investors and banks. It has suggested that the procedure might be taken up by other issuers.

Senior unsecured bank issuance guaranteed by the German financial markets stabilisation fund, SoFFin, looks set to be one of the early focuses of the market this year, with three deals said to be nearing launch.

Fitch has put Wüstenrot Bank AG Pfandbriefbank’s public sector Pfandbriefe on rating watch negative on concerns that the issuer may not have sufficient liquidity in its public sector cover pool to repay the respective Pfandbriefe maturing in January unless the issuer takes remedial action, the rating agency said in December.

Bayerische Landesbank has set up a Eu15bn SoFFin-guaranteed debt issuance programme. The Landesbank is expected to be one of the first to issue guaranteed bank debt out of Germany in the new year.

HSH Nordbank will not be launching its planned SoFFin guaranteed bond issue until next year, and bankers are now considering whether it will even be the first German bank to tap the government guaranteed market.

Caixa Geral de Depósitos and LeasePlan are pricing the first government guaranteed deals from Portugal and the Netherlands, respectively, this (Friday) afternoon. However, the first guaranteed deal from Germany, for HSH Nordbank, is not expected to be rushed to market.

In brief: HSH Nordbank has mandated the first government guaranteed deal from Germany.

Louis Hagen is leaving his position as executive director of the Association of German Pfandbrief Banks after nine years to become a member of the board of managing directors of Münchener Hypothekenbank. He will be replaced by Jens Tolckmitt. [Expands on earlier news alert.]

Rating action: Moody’s yesterday (Tuesday) placed on review for downgrade Bayerische Landesbank’s Aa2 rating, citing pressure on the bank’s financial strength rating and the bank’s changing shareholder structure.

Rating action: Standard & Poor’s today (Tuesday) placed WestLB’s A- rating on CreditWatch with negative implications, but gave the all clear on other Landesbank ratings following reports that these banks’ owners are prepared to provide them with support.

The Association of German Pfandbrief Banks has put forward new proposals to change the Pfandbrief Act on top of those included in the draft amendment that the ministry of finance has approved. Elsewhere, more dramatic changes to the business models of some issuers have also been suggested.

Hypo Real Estate completed the merger of HRE Bank International AG and HRE Bank AG yesterday (Thursday). Fitch reacted by saying that a multi-notch downgrade of HRE Bank’s Pfandbriefe is possible unless the bank addresses increased risks in the merged cover pools.