Global Covered Bond News Roundup - Week Ending July 2

HSH Nordbank prices a three-year issue ... regulatory resistance in Australia ... European issuers urged to pitch CBs in the U.S. ... 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

Melbourne lawyer Paul Quinn wrote a commentary in Business Spectator (July 2) on the possibilities for covered bonds in Australia and the regulatory resistance to it.

DENMARK

BRFkredit (June 28) released the final terms for a covered bond to be opened on July 6.

EUROPE (in general)

• "With no legal framework for covered bonds in the U.S., institutions in Europe should be preparing to take advantage of the enthusiastic investor base that already exists there with dollar-denominated bonds," according to IFLR (June 28).

• "The European Central Bank [ECB] said it has purchased a total of 60.2 billion euros ($73.7 billion) of covered bonds, exceeding the 12-month program's initial goal of 60 billion euros," as noted in Bloomberg Business Week (June 29).  On June 30, the ECB announced that the covered bond purchase program had been "fully implemented" and that "Eurosystem central banks intend to keep the purchased covered bonds until maturity."  ECB President Jean-Claude Trichet "declined to comment on whether the bank could buy more of the securities under the umbrella of its government and corporate bond buying," Bloomberg wrote (June 30).

• Big European banks are working together "to devise a [new] type of covered bond that would be attractive to large institutional investors" such as BlackRock, according to Victor Mallet and Patrick Jenkins in the Financial Times (June 28).

• Tracy Alloway of Financial Times' FT Alphaville (June 28) cited speculation that "covered bonds and ABS not sold off into the wider market are probably being hoarded as possible collateral for central bank funding."

FRANCE

• Moody's Investors Service (July 1) assigned a provisional long-term rating of (P)Aaa to the covered bonds to be issued by Compagnie de Financement Foncier (CFF) under the terms of the US $10 billion U.S. Medium Term Securities Programme established by it. According to Moody's, CFF is now entitled to issue obligations foncières (French legislative covered bonds) under i) the €25 billion Medium Term Note Program and ii) the US Securities Programme, which allows for the Obligations Foncières to be offered a) in an off shore transaction within the meaning of Regulation S under the United States Securities Act 1933, as amended; and b) in the United States to qualified institutional buyers within the meaning of Rule 144A of the Securities Act.

• Separately Moody's (July 1) announced that the update of the base prospectus in respect of the Compagnie de Financement Foncier €125 billion EMTN Program would not, in and of itself and as of that time, result in the reduction or withdrawal of the Aaa rating assigned to Obligations Foncières issued under the Program.

GERMANY

• HSH Nordbank AG (June 28) priced a three-year, €500 million covered bond at 20 basis points over mid-swaps.

• In a new Special Comment (released July 2), Moody's Investors Service analyzes the legal framework for German covered bonds (Pfandbrief Act) and its relative strengths and weaknesses.  The report, titled "Moody's Analysis of Legal Framework For German Pfandbrief," is accessible only to paid subscribers.

GREECE

• National Bank of Greece (NBG) announced (June 28) that it has issued the first three series of covered bonds, for a combined size of € 3.0 billion.  According to NBG, the series have a maturity of five, seven and nine years and a coupon rate based on ECB plus a margin of 170, 200 and 230 basis points respectively, and all series have been rated Baa3 by Moody΄s Investors Service.

• Separately, NBG announced (June 29) that it "wishes to clarify to the public that, given its strong capital base, NBG does not intend to raise equity capital."  Rather, it is "focused on the maintenance and enhancement of such [sic] already strong capital base, especially in the current economic environment."  The announcment was characterized as a "refutation of press reports."

• In addition, Moody's Investors Service (June 28) affirmed that the changes to the Asset Monitor Agreement relating to the covered bond program of NBG, in and of themselves, do not result in a reduction or withdrawal of the current Baa3 rating of the covered bonds issued by National Bank of Greece S.A. under its covered bond program.

ITALY

Moody's Investors Service (June 30) assigned a long-term rating of Aaa to the €1 billion covered bonds (Obbligazioni Bancarie Garantite) due June 30, 2015, issued by Banca Monte dei Paschi di Siena (Banca MPS) under the €10 billion Covered Bond Program unconditionally and irrevocably guaranteed by MPS Covered Bond S.r.l.

NETHERLANDS

Moody's (July 1) withdrew the (P)Aaa rating previously assigned on October 30, 2009 to the Fortis Bank (Nederland) N.V. Covered Bond Program.  The agency stated that the rating was withdrawn in keeping with policy because Fortis Bank (Nederland) N.V. has been reorganized by way of a merger with ABN AMRO Bank N.V. pursuant to which the surviving entity is ABN AMRO Bank N.V.

SPAIN

• Fitch Ratings (June 29) released a performance report stating that the outlook on Spanish multi-issuer cédulas hipotecarias (legislative mortgage covered bonds) continues to be negative, driven by weakening credit profiles of participants, deteriorating asset quality, and declining overcollateralization (OC) across programs.

• Fitch Ratings (July 1) assigned a 'AAA' rating to the €4.325 billion of outstanding cédulas hipotecarias issued by Caja Laboral Popular.

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.