UK

A company called IF Covered Bonds LLP was incorporated in the UK last Friday. The company is thought to have been established for a new covered bond programme for the Intelligent Finance division of Bank of Scotland.

The UK government is expected to announce details of its planned guarantee scheme for residential mortgage backed securities in the next fortnight. The scheme, which could also apply to covered bonds, is targeted at boosting mortgage lending.

Lloyds TSB in December executed £24bn (Eu25.1bn) of covered bonds off the two programmes it established last month. The 12 tranches were retained by Lloyds TSB, which led the issuance.

Lloyds TSB has filed prospectuses for two covered bond programmes, The Cover has learnt since reporting yesterday (Thursday) that the UK bank was close to finalising its plans.

Lloyds TSB appears to have finalised its covered bond programme, according to a regulatory filing.

Following the news yesterday (Thursday) that Norwich & Peterborough Building Society has set up two covered bond-related companies, an official at the institution told The Cover that the move reflects the building society’s interest in extending its funding profile.

In brief: Norwich & Peterborough Building Society yesterday (Wednesday) set up two companies that are expected to be used for covered bond issuance.

Rating action: Moody’s yesterday (Thursday) downgraded Newcastle Building Society from A2 to A3, after downgrading Principality Building Society similarly on Monday. The two institutions have both been working on covered bond programmes.

Skipton Building Society has launched the first covered bond from its Eu5bn programme, a £750m deal.

Alistair Darling, the Chancellor of the Exchequer, gave the residential mortgage backed securities market a pleasant surprise yesterday (Monday) when the pre-Budget report (PBR) held out the promise of a guarantee scheme to help restart mortgage funding. Any such scheme would also be applied to covered bonds.

Rating action: After announcing several negative rating actions on UK building societies on Friday morning, Fitch on Friday afternoon affirmed its ratings of related covered bond issues.

Rating action: Fitch today (Friday) downgraded three building societies and changed its outlook on several others in light of the rapid deterioration of the prospects for the UK economy.