Ireland

In brief: As The Cover was going to press, Moody’s was announcing downgrades to two classes of covered bonds of Hypo Real Estate group, including Depfa. It cut Depfa ACS Bank’s public sector asset covered securities from Aaa to Aa1 and HRE Bank International’s mortgage Pfandbriefe from Aa2 to Aa3.

Moody’s, Standard & Poor’s and Fitch yesterday (Tuesday) took rating actions on the covered bonds issued by Hypo Real Estate group entities following its bailout with a Eu35bn credit facility from the German government and banking industry on Monday. [Updated to correct existing Moody's ratings.]

Bo Heide-Ottosen, the Hypo Real Estate Holding and Depfa board member central to the group’s treasury and public finance activities, has left the group in the wake of its rescue by a consortium of German banks and the German government.

Covered bonds issued by Allied Irish Bank, Bank of Ireland and Anglo Irish Bank were boosted today (Tuesday) by the Irish government’s decision to set up guarantee arrangements for local banks. The arrangement does not, however, affect the asset covered securities of Depfa ACS Bank or WestLB Covered Bond Bank.

Investors’ perceptions of the crises in Spain and Ireland are excessively pessimistic because of the way the media reports them, according to bankers at the Euromoney/ECBC Covered Bond Congress in Paris on Thursday.

After launching its first UK covered bond issues backed by UK mortgages, Bank of Ireland told The Cover that, sitting alongside its Irish asset covered securities issuance, the new programme will give it greater funding flexibility.

Bank of Ireland has set up a Eu15bn UK mortgage covered bond programme under which it has launched eight series with a volume of £500m each.

Bank of Ireland has set up three covered bond related vehicles in the UK, The Cover has learnt, suggesting that it could be setting up a programme under UK legislation. The bank already issues Irish asset covered securities through Bank of Ireland Mortgage Bank.

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.

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.

Bank of Ireland Mortgage Bank this week issued what is believed to be the largest Irish mortgage ACS to be sold to end investors this year, a Eu500m deal. The Cover understands that the Irish issuer has also hired a new head of long term funding from Depfa.

The performance of Ireland's mortgage asset covered securities during the past few months backs up the view of OSFI Canada’s Gilbert Ménard that legislation is not enough to guarantee that a jurisdiction trades at the tight end of the covered bond market, even if it initially appeared to be.