Global Covered Bond News Roundup - Week Ending July 23, 2010

BBVA scores a solid (though wide) Spanish CB issue . . . CFF and CIF Euromortgage tap existing issues . . . hopes for Australian covered bonds in 2011 ... 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

"Australia is expected to allow banks to enter the 2.4 trillion euro ($3.1 trillion) covered bond market next year," says a news story on the topic from Reuters (July 23).

BRAZIL

Luiz Antônio França, president of the Brazilian Association of Real Estate Loans and Savings Companies (Associação Brasileira das Entidades de Crédito Imobiliário e Poupança, known as Abecip), brought up the subject of covered bonds as a real estate funding tool in an interview (in Portuguese) published in Folha (July 20).

EUROPE (in general)

• "As goes the sovereign rating . . . so go the bank ratings . . . and the covered bond ratings."  Tracy Alloway (July 21) at FT.com Alphaville used Moody's rating downgrade of four Portuguese banks (below) as a news pegs to discuss the link between the rating of a country's sovereign debt and its banks' covered bond program ratings.

• A Wall Street Journal column (July 21) celebrating covered bonds made the case that "[d]espite Europe's sovereign-bond crisis, investors are flocking to the [covered bond] market, drawn by the dual security of a claim on the underlying pool of loans and on the issuer."

FRANCE

• Compagnie de Financement Foncier (CFF) (July 23) priced a €450 million tap of an existing 4% 2025 covered bond.  Guidance was at 70 basis points over mid-swaps.

• CIF Euromortgage (July 22) priced a €475 million tap of an existing 3.75% 2019 covered bond at 57 basis points over mid-swaps (listed in Luxembourg).

GERMANY

Credit magazine named Deutsche Bank (DB) as the "world's best bank for euro bonds, high yield bonds and covered bonds" for the second year in a row, DB announced (July 20).

GREECE

Moody's (July 23) assigned a definitive long-term rating of Baa3 (new rating) to the Series 1 Covered Bonds due 2014 issued by Alpha Bank A.E. under its second covered bond program.

IRELAND

Moody's (July 22) downgraded to Aa3 (previously on February 11, 2009 downgraded to Aa2 on review for possible downgrade) the Asset Covered Securities issued by Depfa ACS Bank under its Irish public sector covered bond program.  According to the rating agency, this move affects €48.8 billion in debt securities.

ITALY

Moody's (July 23) assigned a provisional long-term rating of (P)Aaa to the covered bonds to be issued by Banca delle Marche S.p.A. under the €5 billion covered bond program unconditionally and irrevocably guaranteed by Marche Covered Bond S.r.l.

PORTUGAL

• Standard & Poor's (July 22) lowered to 'A+' from 'AAA' and removed from CreditWatch negative its credit rating on Banco BPI S.A.'s mortgage covered bonds (obrigações  hipotecárias), while assigning a negative outlook to them.

• Moody's (July 20) downgraded the mortgage covered bonds issued by four Portuguese banks: Banco BPI (downgraded to Aa1 on review for possible downgrade); Banco Comercial Portugues, S.A. (downgraded to Aa2); Banco Espirito Santo, S.A. (downgraded to Aa1 on review for possible downgrade); and Caixa Económica Montepio Geral (downgraded to A2). 

SPAIN

Banco Bilbao Vizcaya Argentaria SA (BBVA) (July 19) priced a three-year, €2 billion covered bond at 195 basis points over mid-swaps.  Reuters paraphrased bankers and analysts as calling the issue a "positive sign for banks from southern Europe despite the high spread required to woo investors."  Bloomberg also ran an article focusing on the record spread.

SWEDEN

Moody's stated (July 20) that the recent announcement by SEB AG about the planned sale of a significant part of its German retail operations is not expected to impact the Aa1 ratings currently assigned to the mortgage covered bonds (Hypothekenpfandbriefe) issued by SEB.  The agency noted its understanding that SEB intends to provide support to the covered bonds to compensate for any negative rating impact this sale may have on the program.

UNITED KINGDOM

• At a meeting of the holders of the Series 1 Covered Bonds issued by Yorkshire Building Society (July 20), the bondholders duly passed an extraordinary resolution approving the removal of Standard & Poor's Rating Services as set out in a Consent Solicitation Memorandum dated June 28.

• Standard & Poor's Ratings Services (July 20) lowered to 'AA' from 'AAA' and removed from CreditWatch negative its  credit ratings on Bradford & Bingley PLC's (B&B) covered bond program and all series of bonds issued under the program.

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.