United States

The Greek Prime Minister’s decision to provide voters with an opportunity to reject the country’s bailout conditions in a referendum is an unusual move, but not without precedent.

In this round-up, Singapore deposits fell in the first quarter this year, Taiwan RMB deposits rose to a new record, Bank of China joined the new gold benchmark, and the first overseas inverse ETF shorting A-shares entered the market.

With the euro-market all but shut for covered bond issuers, Nordic issuers may look to the US market as an alternative, say US bankers.

A pickup in primary market activity continued apace on Wednesday when Stadshypotek sold the sixth dollar denominated covered bond in the US this year.

Why not pass legislation for covered bonds in the United States? It is easy to do and there is basically no cost to the Treasury, says Jerry Marlatt senior council at Morrison & Foerster LLP in New York.

The securitization market could offer a financing solution for the energy market in Japan, where the government is pushing rooftop solar panel facilities as an alternative to nuclear power following the closure of nearly all the country’s nuclear plants in the aftermath of the 2011 tsunami and earthquake and the ensuing Fukishima accident.

General Motors is planning to introduce its captive auto finance arm into the Chinese market later this year, paving the way for more issuance of auto loan securitizations in the world’s largest auto market. But concerns still remain around the asset class, in a country where securitization laws are relatively new.

A few draft restrictions related to the eligibility of European covered bonds in the liquidity coverage ratio (LCR) have been dropped by the EC suggesting the final wording, due at the end of September, will be supportive for covered bonds. In contrast, covered bonds have been left out in the final wording of US LCR regulations, in line with expectations.

Jerry Marlatt, senior council at Morrison & Foerster LLP and Dr. Mark Calabria, director of financial regulation studies at the CATO Institute speak to The Cover about the Volcker rule and the outlook for US covered bonds.

A US covered bond legal framework may soon be back on the political agenda. A speech by Jacob Lew, US Treasury secretary, last week has caught the attention of market participants, who hope a covered bond bill may be detached from reform of the US government-sponsored enterprises, Fannie Mae and Freddie Mac.

When General Electric issued a debut $500m sukuk five years ago it did not receive a great deal of acclaim. But with the company considering another potential Islamic deal later this year, neither it nor other rumoured Western first time borrowers such as Total should fear for a bad result this time around.

Proposed US legislation, which would protect covered bondholders from losses if a bank fails, is credit positive, Moody’s said this week. However, the law change is unlikely, as it is embedded within controversial plans to reform the US housing market, which may take years to enact, the rating agency added.