Covered Bond Roundup - Week Ending December 18

Two articles from Australia on the future possibility of covered bonds there ... concern about "Dexia's existential crisis" ... ratings uncertainty from a draft French law ... downgrades and an announced covered bond repurchase in Spain ... 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.

Note:  For links to a rating agency site, you will need to log in (free) at the site before clicking the link.  For links to Factiva and some online publications, you may need to have a subscription.

AUSTRALIA

• Bernard Kellerman wrote a commentary that provides background and history on the push for covered bonds in Australia, taking the position that "a new type of highly rated security would be useful here."

• Sonia Goumanis and Jamie Taylor wrote an article (released Dec. 17) titled "Legislative frameworks for the issuance of covered bonds in Australia and the United States?"

BELGIUM

The Wall Street Journal December 14 ran a story on what it called "Dexia's Existential Crisis."

DENMARK

Nordea Kredit Realkreditaktieselskab announced December 14 that it "has completed the auctions of [mortgage covered] bonds to refinance ARMs as of 1 January 2010."

FRANCE

Moody's Investors Service announced December 17 that it was in the process of assessing the potential impact on French covered bonds of the draft amended finance act for 2009 (Projet de Loi de Finance rectificatif pour 2009), which is currently being discussed by the French Parliament.  The draft law provides, among other things, that payments of interest made by a French entity to a non-cooperative state or territory will be subject to a 50% withholding tax.

GREECE

Moody's Investors Service December 16 confirmed the Aaa rating of the residential mortgage covered bonds issued by Alpha Bank Covered Bond Plc, concluding a review for possible downgrade.   Moody's attributed its decision to two credit improvement features: an increase in committed overcollateralization and an increase in the refinancing period.  Meanwhile,Fitch Ratings announced December 15 that Alpha Covered Bond plc's Series 1 and 2 mortgage covered bonds, amounting to €2 billion (rated 'AAA') remain on Rating Watch Negative (RWN) following the implementation of a longer maturity extension period.

ITALY

Fitch Ratings December 16 assigned Unione di Banche Italiane Scpa's (UBI Banca's) new mortgage covered bonds (Obbligazioni Bancarie Garantite, OBG) maturing on December 2019 a 'AAA' rating.   Fitch noted that this second series amounts to €1 billion, following UBI's previous issuance of €1 billion under a €10 billion program.

PORTUGAL

Fitch Ratings December 14 assigned Caixa Economica Montepio Geral's new mortgage covered bonds issue (Obrigacões Hipotecárias) maturing on December 2016 an expected rating of 'AAA.'  Fitch noted that this second series amounts to €150 million, following the bank's previous issuance of €1 billion under a €5 billion program.

SPAIN

• Moody's Investors Service December 17 downgraded the ratings of 45 series of Spanish multi-issuer covered bonds (mostly to Aa1 from Aaa), while confirming 12 series at Aaa.  Moody's stated that the series downgrades resulted primarily from the downgrade of many of the unsecured long-term debt ratings of the issuers of the Spanish covered bonds (Cédulas Hipotecarias) backing the multi-issuer covered bonds.

• La Caixa announced December 17 that it intends to repurchase more than €1 billion worth of cédulas hipotecarias (mortgage covered bonds) from issuances made between 2006 and 2008.

• Fitch Ratings December 18 affirmed Banco Santander's outstanding series of cédulas hipotecarias (mortgage covered bonds), totaling €25.56 billion, at 'AAA.' 

SWEDEN

Moody's Investors Service December 18 confirmed the A2 long-term issuer and senior debt ratings and the Prime-1 short-term rating of Swedbank Mortgage, concluding a review for possible downgrade.  Moody's stated that the rating action reflected the fact that the parent bank, Swedbank AB has provided Swedbank Mortgage with a full, irrevocable and unconditional guarantee on all its senior and covered bond obligations.

UNITED KINGDOM

Moody's Investor's Service Thursday (Dec. 17) released a report titled "Moody's Approach to Quantifying Set-off Risk for Securitisation and Covered Bonds Transactions Originated by UK Deposit-Taking Institutions," in which the rating agency explains its updated methodology on that topic. 

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