UK

Barclays Bank is expected to price its debut, 10 year covered bond at 60bp over mid-swaps, the tight end of official 60bp-65bp guidance. Already another UK bank has mandated for a new covered bond in what could be the second busiest week ever in the market.

Barclays Bank will tomorrow (Tuesday) launch the first benchmark UK covered bond since November 2007 and the first since the Regulated Covered Bond regime came into effect, a 10 year deal that is expected to be at least Eu2bn and at price talk tighter than that heard last week. The deal will hit another frenzied week for covered bonds, with at least two further issues likely in the coming days on top of three today (Monday), and more new names in the pipeline.

Barclays Bank could reopen the UK covered bond market soon with its debut public issue, with the bank setting out on a roadshow for its programme.

An extraordinary resolution to allow the continued involvement of Lloyds TSB Bank as standby account bank in Northern Rock’s covered bond programme was passed at an investors’ meeting held this Tuesday, The Cover understands.

Covered bonds with loans to small and medium sized enterprises or export credit agency guaranteed loans as collateral are now eligible for the Bank of England’s extended-collateral long term repo market operations, dollar repo operations and discount window facility, the central bank announced yesterday (Thursday).

Northern Rock covered bondholders will be given a second chance to vote on the continued involvement of Lloyds TSB Bank as standby account bank in the programme at a meeting to be held on 2 September. The first meeting, held on 6 August, had to be reconvened due to lack of quorum, and one leading investor has called for bondholders to use their vote.

Moody’s today (Thursday) confirmed the Aaa rating of The Co-operative Bank’s covered bonds, concluding a review for possible downgrade that was initiated on 13 May.

The Co-Operative Bank expects to address the implications for its covered bond programme of its issuer rating being downgraded by Fitch, according to the rating agency.

Fitch today (Monday) downgraded The Co-Operative Bank and withdrew Britannia Building Society’s ratings following the merger of the two institutions. The Co-op’s own mortgage-backed covered bonds and those of Britannia, which have been transferred to the former, were affirmed at AAA.

Standard & Poor’s yesterday (Monday) downgraded Clydesdale Bank and Yorkshire Building Society following an update of its assumptions about UK banks’ future credit losses.

The British have long sought out the sunnier climes of continental Europe, but have had to watch jealously from a distance as their euro-area counterparts have basked in the heat the European Central Bank’s purchase programme has brought to the covered bond market. However, after the market proved receptive to the multi-cédulas of AyT Cédulas Cajas, could the market offer UK issuers a welcome break?

Newcastle Building Society has avoided a downgrade of its covered bonds by Moody’s by amending the underlying programme structure.