UK

Fitch today (Friday) affirmed the AAA rating of Bradford & Bingley’s covered bonds, on stable outlook, based on a guarantee from HM Treasury.

Moody’s has updated its approach for analysing set-off risk in UK covered bonds and securitisations, but the revised methodology will not have any rating impact on these, except for credit card master trust transactions, the rating agency said yesterday (Thursday).

Fitch is keeping Northern Rock’s AAA covered bond ratings under analysis pending an announcement of the final terms of the UK government’s guarantee of the bank’s covered bond obligations and any steps taken to support the covered bonds’ credit rating, the agency said yesterday (Wednesday).

The UK government will hold a consultation in early 2010 on potential supplementary rules for Regulated Covered Bonds, it was announced in the Pre-Budget Report yesterday (Wednesday). Covered bonds are also referenced in a consultation paper on strengthening capital standards released by the Financial Services Authority today (Thursday).

The UK authorities’ commitment to safeguarding covered bonds from any potential negative consequences of the 2009 Banking Act was recently underlined by Andrew Bailey, who has been responsible for the Bank of England’s interventions in the banking sector during the crisis and heads its Special Resolution Unit.

Standard Life Bank has increased the overcollateralisation of its covered bond programme to a level that Moody’s considers consistent with a Aaa rating, where the covered bonds were affirmed yesterday (Monday).

The UK Treasury will ensure that timely payments are made to Northern Rock covered bondholders, it said today (Tuesday). Other secured creditors and holders of the bank’s Granite securitisations will not benefit from a government guarantee.

Fitch yesterday (Wednesday) placed Chelsea Building Society’s covered bonds on rating watch positive after assigning the same status to the institution’s long term issuer default rating. The rating actions follow the announcement that Chelsea and Yorkshire Building Society plan to merge.

Chelsea Building Society and Yorkshire Building Society are set to merge, creating an enlarged building society to be known as Yorkshire Building Society, the institutions announced today (Wednesday). Moody’s has affirmed Yorkshire’s ratings and put Chelsea’s on review for upgrade.

Alliance & Leicester is no longer among the issuers listed on the Regulated Covered Bonds Register on the UK Financial Services Authority’s website. [Updated to include issuer comment and redemption of outstanding issue.]

Clydesdale Bank has amended its covered bond programme to introduce a partial pass-through structure, as a result of which Fitch has assigned an improved Discontinuity Factor to the issuer’s covered bonds.

Barclays Bank has issued six series of covered bonds off a new programme backed by loans to local authorities in the UK in the first deal of its type in the country.