United States

News earlier this week that the German regulator, Bafin, had sent out a draft letter regarding the treatment of structured covered bonds, has added to concerns that certain structures may see renewed selling pressure. But for some investors this may herald an investment opportunity.

Congressman Scott Garrett, the Republican politician who has been leading a push for covered bond legislation in the US, has been selected to serve as chairman of the capital markets subcommittee in the House of Representatives, an appointment that US lawyers and market observers cited as one of several grounds for optimism that legislation could be passed next year.

Barclays Capital’s head of covered bond origination in the Americas has left to join RBC Capital Markets, The Cover understands.

The US Covered Bond Council, a forum sponsored by the Securities Industry and Financial Markets Association (Sifma), has questioned the Federal Deposit Insurance Corporation’s understanding of proposed US covered bond legislation and existing law following comments made by the FDIC at a housing finance conference last week.

Fitch placed mortgage backed covered bonds issued by BA Covered Bond Issuer (BACBI) on negative review on Tuesday, after placing Bank of America NA on Rating Watch Negative on Friday.

The Federal Deposit Insurance Corporation wants to work together with Congressional proponents of a US covered bond market to establish “balanced” covered bond legislation to foster such a market, FDIC chairman Sheila Bair said at a housing finance symposium yesterday (Monday). Last week Congressman Scott Garrett told a conference in New York he was “cautiously optimistic” that US covered bond legislation could be finalised before the end of next year.

Fitch placed Bank of America NA on Rating Watch Negative on Friday, following initial interpretation of the Dodd-Frank Wall Street Reform & Consumer Protection Act and its implications for systemically important financial institutions.

Belgium’s Axa Bank Europe secured the first refinancing of its mortgage business via covered bonds today (Friday), with Axa Bank Europe SCF receiving solid demand for an inaugural, Eu750m 10 year obligations foncières issue.

SpareBank 1 Boligkreditt sold a $1.5bn (Eu1.077bn) three year benchmark in the US market yesterday (Wednesday) and the issuer told The Cover that the transaction was part of a strategic move to diversify its investor base.

DnB Nor Boligkreditt debuted in the US market with a $2bn (Eu1.43bn) five year issue on Wednesday that gave it tighter pricing than was available in euros, but the issuer told The Cover that strong US demand was the most pleasing aspect of the benchmark.

EuroWeek and The Cover, in association with Barclays Capital and Goldman Sachs, sought out the views of leading issuers, investors and Congressman Scott Garrett to discuss the US dollar covered bond market’s potential with respect to domestic and foreign issuers, as well as legislative and regulatory issues facing the asset class in the US.

A resurgence of US targeted benchmark covered bond supply this year was welcomed by issuers and investors at the ECBC/Euromoney Covered Bond Congress in Zurich last week, with the buy-side airing a series of recommendations as to how the market could expand.