Germany

Münchener Hypothekenbank could open the post-summer primary market, having mandated BNP Paribas, Commerzbank, DZ Bank and UniCredit Group for a public sector jumbo Pfandbrief to be launched in the coming weeks. The fate of the deal could set the tone for the early autumn issuance season.

DekaBank is planning to enter Luxembourg’s lettres de gage market to give itself greater financing options than are available under Germany’s Pfandbrief Act. The bank has made hires from Depfa Bank and DG Hypothekenbank to staff its operation in the Grand Duchy.

The Association of German Pfandbrief Banks’ plan for market-making to be resumed in September provoked some strong reactions when it was announced last week. The Cover this (Tuesday) morning spoke to vdp executive director Louis Hagen about the association’s subsequent discussions with market-makers.

The Association of German Pfandbrief Banks (vdp) has told banks that it expects them to resume inter-dealer market-making on 1 September, quoting prices for tickets with a minimum size of Eu15m at triple normal bid/offer spreads for jumbos of two years or longer, irrespective of spread level. The move represents a break from common standards with the European Covered Bond Council and runs counter to many of the arguments against fixed market-making standards that have been made in the past year.

Depfa Deutsche Pfandbriefbank priced its second benchmark of the year at the tight end of guidance yesterday (Tuesday) afternoon, taking advantage of thorough groundwork to turn around its Eu2bn as quickly as possible. Depfa’s attentions will turn to potential public ACS issuance in the second half.

Depfa Deutsche Pfandbriefbank rolled back the years this (Tuesday) morning, attracting more than Eu4.5bn of orders for a new two year public sector Pfandbrief. The deal should be priced this afternoon at the tight end of guidance.

Banco BPI opened books on its first covered bond this (Monday) morning, surprising many market participants who had expected the weak tone in the credit markets and summer holidays to dampen issuance. However, even more supply could emerge, with a public sector Pfandbrief being soft-sounded.

Fitch today (Wednesday) said that the draft amendment to the Pfandbrief Act has failed to adequately address the issue of liquidity gaps, which are the most important driver of differences in Discontinuity Factors (D-Factors) assigned by the rating agency to covered bond programmes.

Deutsche Bank may have come first in the all benchmarks ranking for the first half of 2008, but it was by no means the strongest across all markets. Here The Cover reveals the top banks in each of the biggest sectors and examines where the leading banks’ weaknesses lie.

In brief: S&P has downgraded by one notch the long term ratings of seven members of the Hypo Real Estate (HRE) group, citing writedowns in its structured credit portfolio and challenging business conditions. The triple-A ratings of all of the group’s various outstanding covered bonds were affirmed.

The draft amendment of the Pfandbrief Act has been released. The proposal is in line with expectations, including mainly technical changes, with the creation of a new class of aircraft Pfandbriefe being the only radical feature.