Sweden

Standard & Poor’s has cleared at AAA, on stable outlook, mortgage covered bonds issued by Swedbank Mortgage and removed them from negative review.

The composition of the cover pool backing mortgage Pfandbriefe issued by SEB AG is set to change significantly as a result of a sale of the bank’s German retail business to Banco Santander, but the issuer is committed to defending the covered bonds’ Aa1 Moody’s rating.

Standard & Poor’s has promoted Swedish covered bonds to the highest programme category under its revised rating methodology. The reclassification comes before a Wednesday deadline the rating agency set itself to conclude reviews initiated as a result of the change in its criteria.

Sweden’s SEB launched a benchmark covered bond yesterday (Thursday) to demonstrate its ability to access the market in uncertain times, the issuer told The Cover, despite having last year pre-funded a large amount of debt maturing this year and the beginning of next.

Covered bond issuance of Eu500m or greater deals this week is set to top Eu10bn today (Thursday), with SEB having launched the 12th such issue. Meanwhile, WestImmo launched the third Eu500m Pfandbrief of the week this morning.

Confident of investors’ appreciation of changes it has made to improve its credit profile, Swedbank Mortgage yesterday (Monday) at short notice launched a five year benchmark transaction without any deal-specific preparation, the issuer told The Cover.

The covered bond market had one of its busiest ever sessions this (Monday) morning, with four institutions making the most of an issuance window despite overall sentiment remaining fragile.

With more than Eu4bn of benchmark issuance priced yesterday (Wednesday), there were no signs of the covered bond market slowing down after a record first quarter. And pricing at the tight end of guidance for three new benchmarks showed spreads holding up under the heavy supply.

Spread guidance on new issues launched this (Wednesday) morning was wider than levels heard yesterday, but with re-offers ultimately fixed at the tight end of guidance, syndicate bankers were speaking of a good day for covered bonds. Meanwhile, Spanish supply emerged in the form of two taps.

Stadshypotek and Société Générale today (Tuesday) announced mandates for benchmark covered bonds that market participants said are likely to be launched tomorrow (Wednesday). At least one other issuer is said to be planning to access the market, despite a short working week and reduced investor availability due to the Easter holidays.

Sweden’s covered bond issuers have agreed on a single calculation and presentation of loan-to-value ratios for mortgage cover assets to enhance the transparency and comparability of their cover pools.