Luxembourg

Fitch on Friday affirmed the ratings of two of Commerzbank’s covered bond-issuing subsidiaries, on stable outlook, but although Standard & Poor’s confirmed their ratings, it left them on negative outlook.

Euro denominated mortgage bonds issued by Danish covered bond institutions through a new Luxembourg-based central securities depositary have been approved as collateral for loans with the European Central Bank.

A new Danish central securities depositary in Luxembourg has made it possible for Danish mortgage institutions to issue covered bonds that are expected to be eligible as collateral with the European Central Bank and therefore more attractive for investors. Realkredit Danmark is from today (Tuesday) following Nykredit in using the new option.

On 15 October the Luxembourg parliament approved the amended lettres de gage law. The move introduces a new asset class backed by movable assets, a higher loan-to-value limit for residential mortgage assets, and a new minimum overcollateralisation level.

Fitch yesterday (Wednesday) affirmed its AAA rating of Dexia Municipal Agency’s obligations foncières. The affirmation comes despite the rating agency’s downgrade of Dexia Crédit Local from AA+ to AA-, with a stable outlook.

Dexia today (Tuesday) received a Eu6.4bn equity injection from governments and other shareholders after the group’s shares fell almost 30% yesterday (Monday). After a trading suspension was lifted this morning the stock rallied around 20%.

In brief: Standard & Poor’s today (Friday) assigned a preliminary triple-A rating to the first benchmark offering from Dexia’s Luxembourg registered bank, Dexia LdG Banque. The Luxembourg arm is expected to issue up to Eu1.5bn of public sector bonds, though the maturity has not yet been set.

DekaBank is planning to enter Luxembourg’s lettres de gage market to give itself greater financing options than are available under Germany’s Pfandbrief Act. The bank has made hires from Depfa Bank and DG Hypothekenbank to staff its operation in the Grand Duchy.

In brief: Dexia has selected leads for the first benchmark offering from its Luxembourg registered arm, Dexia LdG Banque. Dexia intends to take advantage of the greater flexibility on offer under that country’s jurisdiction.

Luxembourg’s covered bond framework is expected to be updated to introduce a new asset class of “movable objects” lettres de gage, including ships and aircraft, according to the country’s issuers. Under a parliamentary bill, certain ABS will also become eligible for cover pools, a minimum overcollateralisation level of 102% will be introduced, and the maximum loan-to-value ratio of residential mortgages will be increased from 60% to 80%.

Eurohypo Luxembourg priced its $500m three year lettres de gage publiques issue this (Friday) morning having bookbuilt the issue against an unfavourable Treasury market backdrop.

Eurohypo Luxembourg is in the market with a $500m three year lettres de gage Eurobond. The book is almost fully subscribed and pricing is expected by tomorrow (Friday) morning.