Germany

SEB AG nipped into the market this (Wednesday) morning before tomorrow’s continental European holidays to launch a Eu1bn two year public sector Pfandbrief. Some Eu1.25bn of orders had been placed by the time the books were closed late this morning.

Deutsche Apotheker und Ärztebank’s mortgage Pfandbriefe have been assigned a triple-A rating by Standard & Poor’s. The rating agency said today (Wednesday) that the first issue off apoBank’s Eu15bn debt issuance programme, of up to Eu1bn, is expected in mid-2008.

Berlin-Hannoversche Hypothekenbank (BHH) has priced the first Pfandbrief since Düsseldorfer Hypothekenbank (DHB) had to be transferred to the Association of German Banks’ (BdB) guarantee fund on Monday of last week. As such the deal was a vote of confidence in Germany’s product, but pricing issues still remain.

The books were this (Monday) morning opened on a Eu1bn two year public sector Pfandbrief for Berlin-Hannoversche Hypothekenbank, with the solid German investor base and short maturity helping the issuer to steal a march in a week that will be interrupted by public holidays. It is also the first new issue from Germany since Düsseldorfer Hypothekenbank (DHB) had to be transferred to the Association of German Banks (BdB) guarantee fund on Monday of last week.

Fitch yesterday (Tuesday) afternoon reacted to Monday’s transfer of Düsseldorfer Hypothekenbank to the Association of German Banks’ (BdB) guarantee fund by upgrading its long term rating from BBB- to A-. However, some German analysts said that DHB’s fall had already damaged the Pfandbrief’s image and reports of further writedowns at HVB ensured that the sector remained nervous.

Investors’ reactions to the performance of covered bonds in today’s turbulent markets was a topic of discussion at the IIR Securitisation 2008 conference in Amsterdam last Thursday. But while there was understanding of their sentiments, their greater comfort with a certain German name than top Spanish names was questioned.

The last covered bond stronghold against the financial crisis fell last night, when the Association of German Banks (BdB) took control of troubled lender Düsseldorfer Hypothekenbank. The BdB intends to sell the bank to a third party in the coming weeks. There has been an immediate fallout, with France’s Caisse de Refinancement de l’Habitat pulling back from its new issue.

Caisse de Refinancement de l’Habitat has pulled back from launching its new covered bond issue, blaming the events in the German market.

Skandinaviska Enskilda Banken has avoided being knocked off course by adverse headlines and has priced a new Eu1bn five year benchmark covered bond at 17bp over mid-swaps this morning.

Eurohypo has mandated Commerzbank, Deutsche Bank, Dresdner Kleinwort and Morgan Stanley for a five year public sector Pfandbrief issue, its first jumbo this year, but the timing of the deal is unclear. When the deal does emerge, it could take public sector Pfandbriefe into new territory.

WestLB is planning to hit the road over the coming weeks for a new public sector jumbo Pfandbrief, with its lead managers crossing their fingers that the market avoids being derailed by a surge in supply before the bond comes to market.

Moody’s cut Alliance & Leicester’s long term credit rating from Aa3 to A1 yesterday (Wednesday), just days after the UK bank launched and retained the first issue from its covered bond programme. Meanwhile, Düsseldorfer Hypothekenbank has laid out its position in light of Fitch’s rating action last Friday.