Luxembourg

All four institutions that had indicated that they would come to market this week opened their order books today (Tuesday), but had little trouble achieving price and size targets in the middle of or better than those being aimed for.

Swedbank Mortgage will today (Monday) price a seven year covered bond at the tight end of guidance of the 60bp over mid-swaps area. The deal marks the beginning of what looks set to be a busy week in the covered bond market as other issuers have rushed to secure their place in a line-up that is already four institutions deep.

Standard & Poor’s has revised the outlook on Dexia Crédit Local’s A rating from stable to negative because it expects the institution’s funding costs to rise over the next two years as it will no longer benefit from a government guarantee for any new debt issues.

A Eu500m three year deal for Dexia’s Luxembourg covered bond issuer yesterday (Wednesday) reopened the Luxembourg benchmark lettres de gage market that had lain dormant since November 2006. The investor response to the issue was “overwhelming” and bodes well for further issuance in the format, said the issuer.

Dexia Lettres de Gage Banque today (Wednesday) priced its inaugural public covered bond, a Eu500m three year issue, at the tight end of guidance off the back of an easily oversubscribed order book.

Banca Carige is likely to set the maturity of its debut benchmark covered bond at seven years, according to market participants. Meanwhile, a Spanish name is said to be looking closely at the market with the possibility of an imminent deal and Dexia’s Luxembourg registered arm is aiming to settle some unfinished business.

Fitch on Friday took rating actions on five subsidiaries of Commerzbank, including Eurohypo and its Luxembourg subsidiary, following the European Commission’s conditional approval of Germany’s state aid for Commerzbank.

Fitch last week took rating actions on several major banks following a review of the capacity of high grade sovereigns to support their largest and most systemically important commercial banks. The agency upgraded two German Pfandbrief issuers, but cut the ratings of four entities in the Dexia group.

Fitch on Wednesday affirmed Eurohypo Lux’s outstanding lettres de gage publiques at AAA, following an increase in overcollateralisation to counter mismatches in its cover pool.

Caixanova has finally opened books on its first government-guaranteed issue, albeit at the widest spread yet for a Spanish issue. Meanwhile, Dexia and Lloyds yesterday (Tuesday) set new benchmarks for size in the government-guaranteed asset class.

Dexia Crédit Local today (Tuesday) found its second visit to the government-guaranteed market easier than its first and is set to price its new issue this afternoon. Meanwhile Lloyds TSB found demand from unexpected areas in sterling and OeVAG wrapped up its four year euro.

Dexia Crédit Local is hoping to win over investors to its three-way guaranteed paper when it comes to market tomorrow (Tuesday), while OeVAG has today (Monday) been negotiating the differences in opinion on Austrian spreads.