UK

Royal Bank of Scotland launched its first benchmark covered bond this (Wednesday) morning, a Eu1.25bn three year issue that market participants said had succeeded despite coming in a tough market and as the number of Eu500m or greater deals this week hit 10, totalling Eu9.2bn. Meanwhile, Aareal Bank and WL Bank added to the growing supply of sub-Eu1bn issues.

Standard & Poor’s has affirmed at AAA mortgage covered bonds issued by Eurohypo and Barclays’ Spanish arm under its new rating criteria, and assigned the ratings a stable outlook.

Standard & Poor’s has affirmed the AAA ratings of the mortgage covered bond programmes of Bank of Scotland and Lloyds TSB Bank, on stable outlook.

Barclays Bank plans to issue registered covered bonds off its Eu35bn global covered bond programme, the UK bank announced today (Tuesday).

Hopes that benchmark covered bond issuance could restart next week have been reined in after reports that French president Nicolas Sarkozy threatened to pull out of the euro-zone contributed to renewed volatility today (Friday).

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.