Global Covered Bond News Roundup - Week Ending August 6

A Cypress bank issues covered bonds for collateral . . . A professor writes about U.S. covered bonds in the 19th century . . . Eurhypo taps €250 million . . . Caja Madrid to continue repurchases . . . and more

Most items of covered bond news compiled below have not received longer treatment as individual articles in this publication, often because they relate to geographic areas outside our focus, North America.  But we also include links to some articles that we have published separately during the past week  — all organized by country.

Note:  For links to most rating agency sites, you will need to log in (free) at the site before clicking the link (sometimes available without paid subscription only for a limited period of time).  For links to Factiva and some online publications, you may need to have a subscription.

CYPRESS

Marfin Popular Bank (Aug. 4) "issued a new series of covered bonds totalling 1.0 billion euros ($1.3 billion) to be used as collateral for funding from the ECB [European Central Bank]," according to Reuters.

DENMARK

"Nykredit will hold covered bond auctions for DKK 47bn from Friday 3 September to Friday 17 September 2010, both dates included," the company announced (Aug. 6).  The auction's stated purpose is to refinance ARMs of Nykredit and Totalkredit.

EUROPE (in general)

"With the latest revisions to the risk control measures in its collateral framework, the ECB has placed a 'liquidity stamp of approval' on some covered bond products," Structured Finance News paraphrased analysts as saying (Aug. 3).

GERMANY

• Eurohypo planned a €250 million tap on an existing €1 billion covered bond, according to IFR Markets (Aug. 6), with guidance at 14 basis points over mid-swaps.

• Moody's (Aug. 3) downgraded to Aa2 from Aa1 the unguaranteed covered bonds ("Öffentliche Pfandbriefe") issued by Hypo Alpe-Adria-Bank International AG under its public sector covered bond program.  Moody's noted that the public-sector covered bonds which benefit from the State of Carinthia guarantee are not affected by this action and remain Aaa rated.

GREECE

Fitch Ratings (Aug. 4) downgraded Marfin Egnatia Bank's mortgage covered bonds' rating to 'A-' from 'A+' and removed them from Rating Watch Negative (RWN).

NETHERLANDS

Moody's (Aug. 4) placed under review for possible downgrade the €100 Million Series 575 €100,000,000 OTP Jelzalogbank Rt. Credit-Linked Notes due May 2012.  Moody's noted that the transaction represents a repackaging of covered bond issued by OTP Jelzalogbank Rt. and that ING Bank N.V. is the issuer and swap counterparty.

NORWAY

Moody's (Aug. 2) assigned a definitive long-term rating of Aa3 to the covered bonds issued by SpareBank 1 Næringskreditt AS established in accordance with the terms of the Norwegian Financial Institutions Act of 1988 and the regulations issued by the Ministry of Finance of the Kingdom of Norway.

PORTUGAL

Fitch Ratings (Aug. 4) placed Caixa Economica Montepio Geral's Issuer Default ratings (IDR) on Rating Watch Negative (RWN), while stating that the rating actions have no impact on the ratings of Montepio Geral's covered bonds.

RUSSIA

"Covered bonds are a part of Russia's mortgage-finance market's comeback with a possible deal for 2011," according to Asset Securitization Report (Aug. 4), citing a planned CB debut issue by a unit of Société Générale.

SPAIN

Caja Madrid (Aug. 3) announced that it will continue repurchasing mortgage covered bonds (cédulas hipotecarias) — up to €1.9 billion worth - according to Reuters (in Spanish).

UNITED KINGDOM

Mortgage Solutions (Aug. 3) paraphrased Paul Hunt, managing director of Phoebus Software, as saying "a covered bond guarantee scheme to bolster the UK's securitisation market would encourage both banks to lend more and investors to invest in a new asset class."

UNITED STATES

• The latest version of U.S. covered bond legislation (H.R. 5823) — which recently won a favorable vote from the House Financial Services Committee (HFSC) — offers both pluses and minuses, according to a comment published by Moody's Investor's Service (August 2).

• A client update (Aug. 4) from the Goodwin Procter law firm provided another account of the HFSC's vote on H.R. 5823 and of Rep. Melissa Bean's two proposed amendments (one of which passed).

• Financial Times' FT Alphville (Aug. 3) quoted from an economic history paper about a version of covered bonds ("introduced as farm mortgage debentures") that was introduced (unsuccessfully) in the U.S. during the 1880s. (For more information on the paper and where to download it, click here.)

Information from rating agencies in the entries above is typically adapted from those agencies' media releases.  Rating news items should not be relied upon as a substitute for the full text of rating action announcements.