Global News Roundup - Week Ending November 20

Danske Bank, CIF Euromortgage, Ibercaja price new issues ... Pimco visits annual Danish auction ... Fortis reportedly abandons RMBS-backed covered bond plan ... Iceland's Glitnir banki hf cancels its covered bond program ... 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

Moody's Investors Service Thursday (Nov. 19) placed on review for possible downgrade the bank financial strength ratings (BFSRs) and long-term debt and deposit ratings of five Austrian banks: Hypo Tirol Bank AG, Intermarket Bank AG, Raiffeisenlandesbank Niederoesterreich-Wien AG, Raiffeisenlandesbank Oberoesterreich AG and Vorarlberger Landes-und Hypothekenbank AG.  At the same time, Moody's affirmed the BFSR and long-term debt ratings of BAWAG P.S.K.   Moody's noted that the announcement did not deal with possible implications for the covered bond ratings of Austrian banks.

DENMARK

• Danske Bank Wednesday (Nov. 18) priced a €1.25 billion covered bond with a ten-year maturity.  Initial guidance was about 65 basis points over mid-swaps, later tightening to 63 basis points over mid-swaps.

• The Wall Street Journal Thursday (Nov. 19) ran a story on the strong demand enjoyed by Danish banks in the first two day's of Denmark's annual covered bond auction. A Danske Bank analyst is quoted as saying, "We've actually never seen anything so high."  A story published Wednesday (Nov. 18) by Bloomberg highlights the fact that Pimco was attracted to the sale.

• BRFKredit Friday (Nov. 20) announced that it intends to open a covered bond on November 25, 2009.

• According to a transcript of Danske Bank's third quarter earnings call, CFO Tonny Thierry Andersen made a couple of remarks on the bank's use of covered bonds.   He said that in addition to senior unguaranteed funding, "[w]e have also issued covered bonds on our international cover pool, and there's still unutilized potential in this pool."  At a later point, Anderson added: "When you look at the funding we have undertaken now, both with and without state guarantee, we are looking at three to five year space.  We've done covered bond issuance also this quarter, 20 years duration, so we're using all spectra of the duration avenues, so to speak."

FRANCE

• CIF Euromortgage Thursday (Nov. 19) priced a €1.25 billion covered bond, maturing in 2012, at 10 basis points over mid-swaps.

• Moody's Investors Service Thursday (Nov. 19) assigned definitive long-term ratings of Aaa to the following covered bonds issued by CM-CIC Home Loans FCT: Class A1, Class A2 and Class A3 (€1 billion each).

• Moody's Investors Service — which over the course of previous years assigned a non-public rating of Aaa 195 Tr. 1, 2, 3, 4, 5, 6, 7,8 and 9, Obligations Foncières issued by Compagnie de Financement Foncier — announced Tuesday (Nov. 17) that it is publishing its Aaa rating for the series.

GERMANY

• Moody's Investors Service Friday (Nov. 20) assigned the following definitive long-term rating of AAA to the third series of mortgage covered bonds — €40 million Series 3 due November 2016 — issued by Landesbank Berlin AG (LBB) under its Daheim Nr. 1 covered bond program.  Moody's noted that this covered bond program was established under general German law rather than the Pfandbrief Act. According to the rating agency, Series 3 is backed by a secured loan granted to an undisclosed German savings bank. 

• Moody's Investors Service Thursday (Nov. 19) placed on review for possible downgrade the bank financial strength ratings (BFSRs) and long-term debt and deposit ratings of three German banks and associations.  It also affirmed the BFSR of one financial institution but placed its long-term debt and deposit ratings on review for possible downgrade, as well as affirming the BFSRs and long-term debt ratings of 15 other banks.  Moody's further maintained the review for possible downgrade on the ratings of three German financial institutions.  Moody's noted that its announcement did not address possible implications for the covered bond ratings of German banks.

ICELAND

According to an announcement by Moody's Investors Service Friday (Nov. 20), Glitnir banki hf canceled its covered bond program on November 2, 1009.

IRELAND

In the transcript of an interim Bank of Ireland earnings conference call earlier this month, Richie Boucher - the bank's Group Chief Executive -- is quoted as making one remark about covered bonds.  Discussing the bank's €8 billion in term funding in the six months to September (with a maturity of at least one year), Boucher said:  "A particularly positive element of this debt issuance was the EUR1.5 billion covered bond issue in mid September '09.  This was the first partially unguaranteed public benchmark transaction by an Irish institution since the introduction in September '08 of the Government Liability Guarantee scheme."

NETHERLANDS

According to IFR Securitisation Report Tuesday (Nov. 17), Fortis NL is not going ahead with its planned covered bond backed by retained RMBS.  That story came after Fortis completed a non-deal roadshow on its plan to pool existing residential mortgage-backed securities into covered bonds, and the bank reportedly was assessing investor feedback.  According to a story Monday (Nov. 16) in IFR Securitization Report, the program "has been viewed positively by JPM research." (italics added).

NORWAY

Moody's Investors Service Tuesday (Nov. 17) confirmed its Aa2 rating on the mortgage covered bonds issued by Terra Boligkreditt, which were placed on review for possible (further) downgrade in March 2009.   Moody's stated that the confirmation follows the rating agency's decision to maintain the current "High" Timely Payment Indicator (TPI) for this transaction.  In contrast to most Norwegian covered bond issers — which act as a funding platform for an individual bank — Terra acts as a group funding platform for 79 member banks.  Moody's noted that in the event of an insolvency of Terra, many of the banks in the Terra group could be solvent and trading, with no further obligation to support Terra.  According to Moody's, a central question considered in its rating review was whether the cover pool might actually be a less attractive investment for a potential purchaser as a result of the member banks' continued trading status.  Moody's concluded that certain characteristics of Terra's program were sufficient to mitigate the agency's particular concern.

SPAIN

• Ibercaja Tuesday (Nov. 17) priced an inaugural €500 million, five-year covered bond.  Initial guidance was at 65 to 70 basis points over mid-swaps, later tightening to 65 basis points over mid-swaps. 

• In connection with what the Financial Times Monday (Nov. 16) called "a radical reform of the financial sector," Miguel Fernández Ordóñez — governor of the Bank of Spain — said at least 15 of the country's regional savings banks (cajas de ahorros) need to be merged with stronger financial institutions.

UNITED KINGDOM

Alliance & Leicester plc announced that on Tuesday (Nov. 17) it redeemed £2 billion Series 2 Floating Rate Covered Bonds, issued under the company's €10 billion global covered bond program, before their original final maturity date (November 2011).