More Media Reports Reflect Optimism For U.S. Covered Bonds
MarketWatch, The Atlantic, Inside Mortgage Finance cover the topic
By:
By Spencer Punnett
By:
For Covered Bond Investor™
02/08/2010
In the wake of a $2 billion U.S. dollar-denominated covered bond issue from Canadian Imperial Bank of Commerce (CIBC) — and two successful panel discussions on the topic in Washington, D.C. — more media stories are reflecting optimism that the current push for U.S. covered bonds may bear fruit.
- In MarketWatch (Feb. 5), Prabha Natajaran wrote: "Covered bonds could be the ticket to the return of U.S. residential mortgage securitizations for U.S. investors." He quoted a VP of mutual fund portfolios at USAA as saying that "[i]investors are amenable to covered bonds."
- At The Atlantic online, former banker Daniel Indiviglio based a column (Feb. 2) on what he learned at a breakout session on covered bonds at the American Securitization Forum (ASF) conference in Washington (Feb. 1). He spent several paragraphs explaining what covered bonds are and how they work, concluding that "[c]overed bonds could be a great way to solve several of the problems facing the financial industry and mortgage market today. His reasons: (1) "any mortgages used would be prudently originated"; (2) "it's a better long-term funding strategy for banks"; (3) covered bonds could revive investors' confidence in mortgage securities; and (4) they might reduce dependence on mortgage funding through Government-Sponsored Enterprises (GSEs).
- Inside Mortgage Finance ran the headline, "Congressional Support for Covered Bonds Legislation Grows as Backers Hope Third Time is the Charm." The article covered a covered bond event held Jan. 29 in Washington featuring panelists from Bank of America Merrill Lynch, The Association of German Pfandbrief Banks (vdp), Royal Bank of Canada, Morrison & Foerster and Covered Bond Investor™.
All three articles stressed the importance of proposed federal legislation to establish a legal framework governing covered bonds in the U.S. Congressman Scott Garrett last November floated a proposal for such a framework — which was followed by a Congressional hearing on covered bonds — but it is not currently on the table in the form of a bill. Inside Mortgage Finance quoted an aide to Rep. Garrett as saying, "We hope to have something done soon."
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