Global Covered Bond News Roundup - Week Ending June 11

Covered bond issues from Austria, Finland, France, Germany, Sweden and UK, including RBS debut ... Moody's calls new Bank of New Zealand program "credit positive" ... 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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AUSTRIA

Unicredit Bank Austria (June 8) priced a public-sector covered bond with initial guidance at 40-45 basis points over mid-swaps.

DENMARK

VP Securities and affiliates of George Soros have decided to expand their cooperation in the international promotion of the Danish mortgage credit model through a new joint venture, according to a public announcement (June 8).  For this purpose, the parties will form a new joint venture, to be named Absalon II L.P., to provide the necessary technology and consultancy on a global basis with the aim of building up a stable mortgage credit system based on the Danish model.

EUROPE (in general)

• Sonja Cheung wrote for Bloomberg (June 9): "The extra yield investors demand to buy covered bonds in euros instead of government debt is 151 basis points, according to Bank of America Merrill Lynch's EMU Covered Bonds Index. That compares with 165 basis points for senior unsecured bank debt."

• "Despite the rise in pipeline activity, Barclays Capital analysts throw doubt on whether the market will meet their projected target of €14bn worth of benchmark covered bonds this month," Radi Hasawheh wrote at Dow Jones (June 7).  "The July estimate stands at only €9bn, as the market slows down for the summer."  However, Bloomberg noted later in the week (June 9) that June sales had already reached €14.7 billion.

• In Seeking Alpha, Erwan Mahe wrote (June 10) that "Europe urgently needs to buy more covered bonds."

FINLAND

OP Mortgage Bank, a unit of Pohjola Group, priced a five-year, €1 billion mortgage covered bond at 40 basis points over mid-swaps.

FRANCE

• Caisse de Refinancement de L'Habitat (CRH) (June 7) priced a ten-year, €1.25 billion covered at 60 basis points over mid-swaps.

• CIF Euromortgage (June 8) priced a ten-year, €700 million covered bond at 65 basis points over mid-swaps.  Initial guidance was 60-65 basis points over mid-swaps, for a planned €500 million minimum.

GERMANY

• Muenchener Hypothekenbank (June 7) priced a five-year, €1.25 billion covered bond at 8 basis points over mid-swaps.

• Eurohypo AG (June 8) priced a five-year, €1 billion covered bond at 30 basis points over mid-swaps.

• Aareal Bank (June 9) priced a three-year, €500 million covered bond at 25 basis points over mid-swaps.

• Westfälische Landschaft Bodenkreditbank (WL Bank) (June 9) priced a seven-year, €500 million covered bond at 13 basis points over mid-swaps.

• Westdeutsche Immobilien Bank AG  (WestImmo), a unit of WestLB AG (June 10) priced a two-year, €500 million covered bond at 17 basis points over mid-swaps.

GREECE

Eurobank (June 9) successfully issued two covered bonds, totalling €1.2 billion, "as part of a strategy to boost its cash flow and secure funding."

ITALY

Moody's assigned a provisional long-term rating of (P)Aaa to the series of covered bonds to be issued by Monte dei Paschi di Siena S.p.A. under the €10 billion covered bond program unconditionally and irrevocably guaranteed by MPS Covered Bond S.r.l.

NETHERLANDS

Moody's Investors Service (June 8) confirmed at Aa2 the covered bonds issued by Achmea Hypotheekbank N.V. (Achmea or the issuer) under its Dutch mortgage covered bond program.  Previously, the bonds were downgraded (April 23, 2009) to Aa2 from Aaa on review for downgrade and kept on review for further downgrade.   Moody's stated that rating action followed the agency's conclusion of its review of the covered bonds following Achmea's restructuring of certain aspects of the Program.

PORTUGAL

Standard & Poor's Ratings Services  (June 4) took the following actions: (1) affirmed and removed from CreditWatch negative its 'AAA' credit ratings  on Caixa Geral de Depósitos S.A.'s mortgage covered bonds ("obrigações hipotecárias"); (2) assigned a negative outlook to these  mortgage covered bonds; and (3) withdrew its ratings at the issuer's request.

NEW ZEALAND

• Moody's Investors Service (June 8) opined that the Bank of New Zealand's (BNZ) new NZ$3 billion covered bond program is a credit positive for both BNZ and the country's broader banking sector as it widens the range of available wholesale funding options.  Moody's announcement quotes Marina Ip, an assistant vice president at the agency's Sydney office, as saying that the program will  "place BNZ in a sweet spot from a credit perspective because it establishes a new debt product, allows for more issuance in future, and if the size is small enough, would not trigger negative credit implications."

• "Massey University banking lecturer David Tripe says the [BNZ covered bonds] will help banks meet new Reserve Bank rules requiring 70% of their funding to come from local deposits and wholesale funding of a year or longer by next year, and 75% in 2012," according to a story from Radio New Zealand.

SWEDEN

• Swedbank Hypotek, AV (June 7) priced a five-year, €1 billion covered bond at 52 basis points over mid-swaps.

• Skandinaviska Enskilda Banken AB (SEB) (June 10) priced a five-year, €1 billion covered bond at 45 basis points over mid-swaps.

UNITED KINGDOM

• Lloyds TSB Band plc (June 7) published a prospectus in connection with its €15 billion Global Covered Bond Programme.  To download a PDF of the 266-page prospectus (for educational purposes only — not intended for distribution to U.S. investors), click here.  Covered bonds under this program will not be registered under the U.S. Securities Act of 1933, as amended. 

• Royal Bank of Scotland Group Plc (RBS) (June 9) priced its debut three-year, €1.25 covered bond at 125 basis points over the benchmark swap rate.  The spread tightened by 5-10 basis points in the aftermarket, according to Reuters (June 10).  Moody's (June 7) assigned a provisional long-term rating of (P)Aaa to the covered bonds Series 1 to be issued under the RBS program, and Fitch Ratings assigned an expected 'AAA' rating.  According to Fitch, RBS's cover pool is made up of UK mortgage loans originated by itself and National Westminster Home Loans Limited, a subsidiary of the Royal Bank of Scotland Group plc.

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.