Ireland

Bank of Ireland as good as signalled the complete recovery of the covered bond market, in terms of access at least, by launching a Eu1.5bn five year deal that is the first Irish issue in the public markets since June 2007. And while spreads for such issuers may remain at unprecedented levels, the strong rally is nevertheless encouraging many credits to explore possible new issues.

Standard & Poor’s yesterday (Monday) downgraded Anglo Irish Bank Corp Ltd from A- to BBB+ and removed the rating from negative watch.

Moody’s yesterday downgraded Anglo Irish Bank and placed the ratings of Allied Irish Banks and Bank of Ireland on review for possible downgrade.

Standard & Poor’s on Friday put Allied Irish Bank on CreditWatch negative, reflecting uncertainty over the bank’s profile and the Irish government’s “bad bank” plan.

Fitch yesterday (Thursday) affirmed the AAA rating of Allied Irish Bank Mortgage Bank's residential mortgage covered securities and Bank of Ireland's UK covered bonds. However, a recent downgrade of the issuers, which are the swap counterparties for their covered bond programmes, means that remedial action is necessary.

EBS Building Society issued the first Irish government-guaranteed bank debt in two months yesterday (Wednesday), shortly before Fitch downgraded the sovereign from AAA to AA+ and put the country on negative outlook. The rating agency today (Thursday) cut Allied Irish Banks and Bank of Ireland by one notch.

Moody's expects the Irish banking sector to be affected by higher credit losses on loan portfolios than previously anticipated, and yesterday (Tuesday) took multiple rating actions on 12 Irish banks to reflect this. However, an agency to buy bad loans that the Irish government plans to set up will benefit certain banks.

The rating agencies yesterday (Thursday) moved on Allied Irish Banks and Bank of Ireland, with Moody's taking the firmest action.

Fitch on Friday affirmed the AAA rating of Anglo Irish’s commercial mortgage covered bonds issued in the UK after making an exception to the criteria it usually applies to a bank that fails to meet the minimum swap counterparty ratings for top rated covered bonds.

Fitch yesterday (Tuesday) affirmed the ratings of Hypo Real Estate’s operating subsidiaries at A- with a stable outlook.

Fitch yesterday (Tuesday) said that the Irish covered bond framework provides a strong foundation for the continuity of covered bond payments in the event of issuer insolvency.

Two days after downgrading EBS Mortgage Finance, Fitch on Friday affirmed the AAA rating of its covered bonds, but said that it will be keeping a close eye on developments surrounding the covered bonds’ overcollateralisation and swap counterparty.