Covered Bond Roundup - Week Ending January 22

New issues from France, Spain and Switzerland ... Ratings Watch Negative for eight German covered bond programs ... 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

In an article on the winding-down of government-guaranteed debt issuance, The Australian noted (Jan. 22) that "[t]he finance industry has been pressing for the federal government to soften the end of the guarantees by allowing the banks to issue 'covered bonds,'" despite ongoing opposition from the Australian Prudential Regulation Authority.

FRANCE

• Crédit Agricole (Jan. 21) priced a €2 billion covered bond with a three-year maturity at 23 basis points over mid-swaps.

• Dexia Municipal Agency SA (Jan. 20) priced a €1 billion covered bond with a twelve-year maturity at 62 basis points over mid-swaps.

• Fitch Ratings (Jan. 22) assigned CM-CIC Covered Bonds' issue 8 €1.5 billion five-year mortgage covered bonds a final 'AAA' rating, while simultaneously affirming CM-CIC CB's other €14.155 billion outstanding covered bonds at 'AAA'.  The covered bond program in question was set up in June 2007 based on contractual undertakings - i.e., outside the legal framework for issuance of French obligations foncières.

• Standard & Poor's Ratings Services (Jan. 18) removed from CreditWatch negative and affirmed its 'AAA' credit ratings on two French (and three Canadian) covered bond programs.  The French programs are from CM-CIC Covered Bonds (structured covered bonds) and Compagnie de Financement Foncier (legislation-enabled covered bonds).  [For the Canadian programs, click here.]

GERMANY

• In the wake of Landesbank Baden-Württemberg's (LBBW) request for Standard & Poor's Rating Services to cease rating its covered bonds, FT Alphaville queried (Jan. 21) whether S&P's revised rating methodology may be having "consequences."

• Fitch Ratings (Jan. 21) placed eight German banks' mortgage covered bond programs on Rating Watch Negative (RWN) and maintained another German bank's mortgage covered bond program on RWN.  The programs placed on RWN by this action are: Aareal Bank AG Mortgage Pfandbriefe ('AAA'); Bayerische Landesbank Mortgage Pfandbriefe ('AAA'); Berlin-Hannoversche Hypothekenbank AG Mortgage Pfandbriefe ('AA+');  CorealcreditBank AG Mortgage Pfandbriefe ('AA-'); Deutsche Genossenschafts-Hypothekenbank AG Mortgage Pfandbriefe ('AAA'); Eurohypo AG Mortgage Pfandbriefe ('AAA'); Landesbank Hessen-Thueringen Girozentrale  Mortgage Pfandbriefe ('AAA' ); and UniCredit Bank AG Mortgage Pfandbriefe ('AAA').  The covered bond program maintained ob RWN by this action is Deutsche Pfandbriefbank AG - Mortgage Pfandbriefe ('AA+').  Fitch stated that rating actions reflect the agency's view of a heightened credit risk in commercial real estate lending, coupled with the limited availability of detailed information about the commercial real estate exposure backing covered bonds which is deemed necessary to quantify the Fitch-supporting over-collateralization for a given rating. 

SPAIN

Banco Santander SA (Jan. 19) priced a €1 billion covered bond with a five-year maturity at 50 basis points over mid-swaps.  As characterized by El Economista,  the issuance was "received with great success in the market."  The move came after Santander's UK unit, Abbey National Plc, postponed a planned covered bond the previous week, reportedly because of pricing difficulties.

SWITZERLAND

Fitch Ratings assigned UBS AG's €2 billion, three-year third mortgage covered bonds issue a rating of 'AAA,' while simultaneously affirming the rating of the other €3 billion outstanding covered bonds issued by UBS at 'AAA.'  The third issue bonds are issued with a hard bullet redemption and benefit from a nine month pre-maturity test.

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