Luxembourg

Lettres de gage publiques issued by NordLB Covered Finance Bank have been rated by a second rating agency, with Fitch on Friday assigning them a AAA rating.

Standard & Poor’s has affirmed at AAA the public sector-backed covered bonds issued by Dexia LdG Banque and Eurohypo Luxembourg, but assigned a negative outlook to the latter’s because their rating would automatically be cut in the event of an issuer downgrade.

Standard & Poor’s removed 10 covered bond programmes from review after affirming their ratings at AAA on Friday, but downgraded five programmes and these remain on review. The actions were taken on the last day of a four month period by the end of which S&P said it aimed to have resolved all 98 ratings it placed on review in December after introducing a new methodology.

Eurohypo Luxembourg yesterday (Tuesday) launched a Eu750m three year public sector lettres de gage transaction a week earlier than planned in response to an issuance window that manifested itself quickly, the issuer told The Cover.

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.