UK

The UK Treasury has said that covered bonds are not an acceptable asset for liquidity buffers, arguing in a submission on CRD IV that the crisis has shown that they are not “resiliently liquid instruments”. Among other EU authorities to respond to the European Commission, only the Maltese adopt a similar position.

Standard & Poor’s has affirmed at AAA the rating of covered bonds issued by Northern Rock (Asset Management) under its new rating methodology.

In brief: Royal Bank of Scotland has set up a Eu15bn global covered bond programme, which has been approved by the Financial Services Authority for inclusion on its Regulated Covered Bond Register.

The UK government called for further work among building societies towards pooled funding models, including joint covered bonds, in a discussion paper yesterday (Tuesday). Meanwhile, the Council of Mortgage Lenders said that last week’s budget was disappointingly short on detail about government action to help securitisation and covered bond markets.

Representatives from the mortgage industry discussed the UK authorities’ approach to improving the funding environment for lenders at a conference yesterday (Wednesday) where a new industry body, the Mortgage Funding Group, was launched.

The Bank of England today (Wednesday) issued a consultation paper proposing enhanced disclosure requirements for asset-backed securities and covered bonds accepted in its operations, saying that this is necessary not only for itself but also for market-wide transparency.

The Council of Mortgage Lenders has published a budget submission to HM Treasury calling for the UK authorities to signal their support for covered bonds and residential mortgage-backed securitisation, and explain how the end of funding through the Bank of England’s Special Liquidity Scheme and the Treasury’s Credit Guarantee Scheme will be dealt with. Meanwhile, a new industry body is being created to focus on funding UK mortgage lending.

Abbey National Treasury Services priced a Eu1bn three year covered bond at 68bp over mid-swaps yesterday (Thursday) after having gone out with guidance mindful of the eye-catching spread at which Lloyds TSB had initially marketed a deal on Tuesday. An official at Lloyds TSB, meanwhile, told The Cover that judging the right starting level had been more complicated than usual.

Standard & Poor’s has affirmed Landesbank Hessen-Thüringen’s public sector covered bonds at AAA under its new rating methodology, and withdrawn its AAA, watch negative, rating of Standard Life Bank’s programme following a redemption of the issuer’s last outstanding series.

Abbey National Treasury Services has built a thrice oversubscribed order book for a Eu1bn three year issue that will be priced today (Thursday), a day after Lloyds TSB made its Regulated Covered Bond debut. Meanwhile, two more new issues have been mandated.

Lloyds TSB has priced a Eu1.5bn five year Regulated Covered Bond inside HBOS’s secondary curve, whose sway over the final re-offer level market participants had been debating given that the two issuers are part of the same group. Meanwhile, SpareBank 1 Boligkreditt issued a Eu1.25bn seven year deal.

Lloyds TSB has opened the books for an inaugural issue off its Regulated Covered Bond programme today (Tuesday). Meanwhile, SpareBank 1 Boligkreditt has announced plans to tap the market.