Global Covered Bond News Roundup - October 19

New issues from CIF Euromortgage, Deutsche Pfandbriefbank and Banco Santander Totta (Portugal) ... issuance plans by Eurohypo and Banca Carige ... credit agency views on Spanish banking system and proposed amendments to Swedish covered bond law ... 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.

Note:  For links to a rating agency site, you will need to log in (free) at the site before clicking the link.  For links to Factiva and some online publications, you may need to have a subscription.

AUSTRIA

According to Reuters (Oct. 13), Raiffeisen Zentralbank (RBZ) is aiming for a 30% market share in lending to Austrian towns and communes (local administrative districts), financed by covered bonds.

AZERBAIJAN

The Azerbaijani government and the International Finance Corporation (IFC) are drafting a covered bond bill to help fund the country's commercial real estate mortgage sector in the country, according to a report October 12.

EUROPE (in general)

In a Reuters column (Oct. 16), Neil Unmack argues that it is "time to kick away" the crutch of purchases under the European Central Bank's covered bond purchase program. 

FRANCE

CIF Euromortgage October 13 priced a ten-year, €1.25 billion covered bond, with initial guidance at about 47 basis points over mid-swaps, later tightening to 45 basis points over mid-swaps.

GERMANY

• Early in the week of October 19, Eurohypo probably will issue a €1 billion mortgage-backed covered bond maturing in January 15, 2015, according to reports October 16.

• Deutsche Pfandbriefbank launched a public-sector, euro-denominated benchmark covered bond with a ten year maturity, according to reports October 14.  Deutsche Pfandbriefbank — part of Hypo Real Estate — is the product of a merger between Hypo Real Estate and Depfa Deutsche Pfandbriefbank AG.

• A Reuters article (Oct. 16) briefly describes the status of certain state-aided banks, including covered bond issuer Hypo Real Estate and BayernLB, whose fate the European Competition Commissioner currently holds "in the palm of her hand." 

ITALY

• Banca Carige SpA, a regional bank, is mounting a roadshow to promote a planned covered bond.  In addition, it reportedly is interested in buying some 30 out of 150 branches offered for sale by another Italian bank, Banca Monte dei Paschi di Siena SpA.

• Fitch Ratings October 12 assigned Banca Popolare di Milano's (BPM's) second benchmark issue of €1 billion mortgage covered bonds a final 'AAA' rating.  The bonds, which have a scheduled maturity of seven years, are guaranteed by BPM Covered Bond S.r.l., a special purpose company established under the Italian Obbligazioni Bancarie Garantite (OBG) Law.  According to Fitch, the collateral consists of first-charge, residential mortgage loans originated in Italy by BPM. As of 31 August 2009, the pool consisted of 22,646 loans totaling approximately €2.3 billion, with an average original loan-to-value ratio (LTV) of 58.7%.

PORTUGAL

Banco Santander Totta October 14 priced a €1.5 billion, five-year mortgage covered bond, with guidance at about 55 basis points over mid-swaps.

SPAIN

• In a report published October 16, Fitch Ratings opined that the Spanish banking system has weathered the global financial crisis successfully to date — with no need for capital support from the state — due to its retail banking focus, prudent regulation and limited exposure to structured products and complex instruments. However, Fitch stated that the strong economic adjustment that Spain is experiencing, the sharp rise in unemployment in a short period and a large exposure to the Spanish property sector have had knock-on effects on revenue and domestic loan quality, affecting the banks' H109 operating profitability.  The rating agency identified a key challenge facing Spanish banks is managing the sharp deterioration in asset quality as a result of their large exposure to the troubled domestic property sector.

• Cajamar decided that its planned inaugural five-year covered bond will be at least €750 million in size, with initial guidance of 85 basis points over mid-swaps, according to reports October 15.

• Fitch Ratings October 15 assigned Banco Español de Crédito's (Banesto's) €1.25 billion issue of cédulas hipotecarias (CHs), due in February 2013, a final 'AAA' rating, while simultaneously affirming all the bank's other rated outstanding CHs at 'AAA'.  According to Fitch, Banesto's total mortgage book as of April 2009 was €33 billion, of which €24.5 billion complied with the legal eligibility criteria for setting issuance limits.  The mortgage book mostly consists of loans for residential purposes — mainly to private individuals, loans to developers and commercial loans to Small and Medium Sized Enterprises (SMEs).  The weighted average (WA) current loan-to-value (LTV) ratio is 55%.

• To read a Fitch Ratings New Issue report (Oct. 15) on cédulas hipotecarias (mortgage covered bonds) from Caja de Ahorro y Monte de Piedad de Madrid on the Fitch Ratings website, first log in (free) at www.fitchratings.com, then click here.

SWEDEN

Fitch Ratings announced October 12 that the proposed amendment to Sweden's Covered Bonds Issuance Act, by itself, would not lead the rating agency to assign an improved liquidity gap assessment for Swedish covered bonds.

SWITZERLAND

To read a New Issue report (Oct. 12) from Fitch Ratings on UBS AG's mortgage covered bonds, first log in (free) at www.fitchratings.com, then click here. 

UNITED KINGDOM

Abbey National released its final terms dated 14 October 2009 relating to €1.75 billion Series 11, 3.625% Covered Bonds due 2016 under its €25 billion Global Covered Bond, to be read in conjunction with the Prospectus dated 8 September 2009, as supplemented from time to time.  [The link is provided here for educational purposes only; the bonds are not offered for sale to persons in the U.S.] Fitch Ratings assigned the bonds a 'AAA' rating.  According to Fitch, as of 30 July 2009, the cover pool consisted of 202,692 self-originated UK mortgage loans, totaling approximately £22.8 billion, with a weighted average (WA) original loan-to-value ratio (LTV) of 69.3%.

Information from rating agencies in the entries above is typically adapted from those agencies' media releases.