Covered Bond News Roundup - Week Ending February 12

Despite a volatile financial climate, covered bond issues proceed in "core" countries (principally France and Germany), while an Italian bank puts plans on hold ... increasing optimism that Australian regulators will approve covered bond issuance there ...  German cover pools face exposure from Greek crisis ... 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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AUSTRALIA

• "It is believed that fierce lobbying by various smaller banks and non-bank lenders is going on behind the scenes to convince Treasury and the federal government to introduce legislation that allows the creation of a multibillion-dollar covered bond market," according to a column by Adele Ferguson in the Sydney Morning Herald (Feb. 9).  There appears to be increasing optimism that Treasury will accede.  The column characterized covered bonds as a potential funding "godsend" for smaller financial institutions.

• In a column somewhat critical of the Sydney Morning Herald piece (above), Christopher Joye of the Business Spectator (Feb. 10) made a case that "it is fallacious to assume that covered bonds could serve as a surrogate for securitisation"  — and added that they "are unlikely to help non-bank lenders."

AZERBERBAJAN

According to the Azerbaijan Business Center (Feb. 11), the Azerbaijan State Securities Committee (ASSC) hopes during the first quarter of this year "to complete work over final version of the Draft Law [on covered bonds] and submit it to the Cabinet of Ministers."

DENMARK

Danske Bank A/S (Feb. 11) priced a 200 million Swiss Franc covered bond issue.

FRANCE

• CM-CIC (part of Banque Federative du Credit Mutuel) (Feb. 11) priced a €1 billion covered bond issue at 52 basis points over mid-swaps.

• Caisse de Refinancement de l'Habitat (Feb. 10) priced a €1.2 billion covered bond maturing in 2020 at 53 basis points over mid-swaps.

• In the wake of an agreement reached between the European Commission (EC) and the states of Belgium, France and Luxembourg on Dexia's restructuring plan, Fitch Ratings (Feb. 9) affirmed the Long-term and Short-Term Issuer Default Ratings (IDRs) of Dexia and its three core operating subsidiaries, while keeping the entities' Individual Ratings on Rating Watch Negative (RWN).  Fitch stated that the rating actions have no impact on Dexia Municipal Agency's covered bond rating of 'AAA' or the 'AA+' rating of Dexia's issues which are jointly, but not severally guaranteed by the states of Belgium, France and Luxembourg.

GERMANY

• Eurohypo AG (Feb. 10) priced a €1.5 billion covered bond maturing in 2013 at 17 basis points over mid-swaps.

• "German banks in the pfandbrief - or covered bond - 
segment, which include landesbanks and Deutsche Postbank ... hold a total of nearly 15 billion euros in Greek
 securities," according to a Reuters story (Feb. 11) on German banks' exposure to the Greek financial crisis.  The Financial Times put it this way (Feb. 10): "German banks have about $43 [billion] of exposure, about half through holding Greek debt to provide backing for issuance of so-called covered bonds."

IRELAND

An article at www.tribune.ie  (Feb. 7) focused on concerns that "AIB, Bank of Ireland and EBS will find it more expensive to raise funds if Moody's and Standard & Poor's go ahead with [covered bond rating methodology] rule changes."

ITALY

After starting a roadshow (Jan. 25), Banco Populare has put plans for a €5 billion covered bond program on indefinite hold because of the volatile current market climate, according to Reuters (Feb. 11).

MEXICO

At a New York City presentation by Mexican officials for "Mexican Housing Day," attendees were told (among other things) that "[c]overed bonds will be introduced, which will provide investors with an investment alternative," according to a media release (Feb. 9).  (According to previous press reports, covered bonds were earlier planned for 2009.)

NETHERLANDS

Moody's Investors Service (Feb. 10) assigned a definitive long-term rating of Aaa to the covered bonds issued by ABN AMRO Bank N.V. (previously ABN AMRO II N.V.) under its €25 billion covered bond program. Moody's stated: "The obligations of the Issuer under the Covered Bonds, and in other capacities under the Programme, have been assumed by the Issuer pursuant to a legal demerger under Dutch law. Previously the rights and obligations of the Issuer were held by The Royal Bank of Scotland N.V. (previously ABN AMRO Bank N.V.)"  The rating agency earlier described the demerger and its implications in more detail when it assigned a provisional long-term rating of (P)aa to the covered bonds (Feb. 8).

SWITZERLAND

UBS "is seeing some funding diversification benefits from [its] new Swiss residential mortgage covered bond program" — issuing 4.5 billion Swiss Francs' worth in the last fiscal period — according to an article in Structured Finance News (Feb. 9).

UNITED KINGDOM

In connection with a demerger (see entry for ABN AMRO Bank under "Netherlands, above), Moody's Investors Service (Feb. 10) withdrew its ratings on listed series of covered bonds previously issued by The Royal Bank of Scotland N.V. (previously ABN AMRO Bank N.V.) pursuant to the ABN AMRO Bank N.V. Covered Bond Program.

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