Covered Bond News Roundup - Week Ending Feb. 19

New covered bond issues from WestLB, BNP Paribas, Dexia and WL Bank ... possible rating downgrades for Greek CBs ... concerns about "sovereign jitters" ... and more.

Some items of covered bond news do not rate their own story in this publication — often because they relate to geographic areas outside our focus, North America.  Even so, readers who want to keep up with covered bond news in general might find them interesting.

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EUROPE (in general)

• ECB's head of market operations analysis division expressed doubts as to whether "everything [in the covered bond sector] is going better," according to Reuters (Feb. 17).

• A posting on FT Alphaville by Tracy Alloway (Feb. 16) posited that because Standard & Poor's has "rejigged how they link the bonds' ratings with those of their issuers," there is a likelihood that "sovereign jitters could start to significantly seep into covereds." Alloway later made a similar observation (Feb. 19) specifically in the context of a rating announcement by Moody's Investors Service related to Greek covered bonds (see Moody's rating action under "Greece," below).

FRANCE

• BNP Paribas Public Sector SCF (Feb. 18) priced a €1 billion covered bond with a ten year maturity at 63.4 basis points over 3.25% 2020 DBR.  (Listing: Paris.)

• Dexia Municipal Agency (Feb. 17) priced a €1 billion covered bond with an eight year maturity.  (Listing: Luxembourg.)

• Fitch Ratings (Feb. 15, corrected Feb. 16) assigned Société Générale Société de Crédit Foncier's (SG SCF) Series 23 €1 billion twelve-year obligations foncières (legislative covered bonds) a 'AAA' rating, while simultaneously affirming the ratings of all SG SCF's €6.146 billion equivalent outstanding obligations foncières at 'AAA.'

GERMANY

• WestLB (Feb. 19) priced a five-year, €1 billion pubic-sector covered bond at 20 basis points over midswaps.  (Listing: Dusseldorf.)

• WL Bank (Feb. 18) priced a €1 billion jumbo public-sector Pfandbrief (legislative covered bond) with a five-year maturity at eight basis points over mid-swaps. (Listing: Frankfurt.)

• "German banks in the pfandbrief — or covered bond — segment may suffer an increase of refinancing costs in light of their loans to public entities [amounting to €47.3 billion] in Portugal, Ireland, Italy, Greece and Spain (PIIGS) - the eurozone states with the weakest public finances," according to Financial Times Deutschland (Feb. 15).

GREECE

Moody's Investors Service (Feb. 19) placed the Aaa ratings of all (except one) Greek ABS, RMBS, CLO and covered bond transactions under review for possible downgrade.  Moody's stated that the rating actions resulted from an initial assessment of those highly rated Greek structured finance and covered bond transactions within the context of the evolving sovereign situation as well as the current economic and financial environment.  Tracy Alloway cited this (Feb. 19) as a possible example of how "sovereign jitters are increasingly feeding into the ratings of the on-balance-sheet bonds."

HUNGARY

Moody's Investors Service (Feb. 19) withdrew the covered bond ratings of UniCredit Jelzálogbank (Hungary) "for business reasons."  Moody's stated that the rating action does not reflect a change in the bank's creditworthiness or a change in the credit quality of the cover pool assets.

SPAIN

Moody's Investors Service (Feb. 19) assigned a definitive long-term rating of Aaa to the mortgage covered bonds (Cédulas Hipotecarias) issued by Caja de Ahorros de Vitoria y Álava (Caja Vital).

Information from rating agencies in the entries above is typically adapted from those agencies' media releases.