Weekly Global Roundup (June 5)

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.  Here is this week's roundup, linked to various online sources.

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

Moody's Investors Service Wednesday (June 3) assigned a Aaa rating to the covered bond ISIN XS0242204609 issued by Kommunalkredit Austria AG.  Moody's stated that the rating is being reviewed for possible downgrade.  At the same time, Moody's withdrew the senior unsecured rating of Aa3 on the same bond due to a correction by the issuer of the terms and conditions of the bond.

EUROPE (generally)

• Some bankers attending the Global ABS annual conference held in London Wednesday (June 3, 2009) insisted that the recent resurgence in the covered bond market does not mean the end of the (currently moribund) ABS market.

• Reuters Friday (June 5) cited a “market expert” to the effect that some second-tier issuers of covered bonds probably will launch deals in July.  This was attributed to the European Central Bank’s plans to buy covered bonds starting next month.  Ireland, Greece, and Spain were identified as countries where the second-tier issuance is likely to take place.

• [For a story on the European Central Bank's announcement Thursday (May 4) disclosing details of its planned purchase program for covered bonds, click here.]

FINLAND

Aktia Real Estate Mortgage Bank Wednesday (June 3) announced that its issuance of a five-year, €600 million (USD $856 million) covered bond met with "much interest among domestic and foreign investors."  The coupon rate was 4.125%.

FRANCE

BNP Paribas Tuesday (June 2) undertook to sell an inaugural €1 billion  (USD $1.4 billion) five-year Obligation Foncière (French legislative covered bond), with guidance at about 80 basis points over mid-swaps.

GERMANY

• Aareal Bank Wednesday (June 3) undertook to sell a €500 million (USD $700 million), three-year mortgage covered bond, with initial guidance at about 45 basis points over mid-swaps.

• Deutsche Bank Tuesday (June 2) priced a €1 billion (USD $1.4 billion), seven-year covered bond issue at 55 basis points over mid-swaps.  It was five times oversubscribed, with more than 170 orders when the book closed.

• Investors in Hypo Real Estate (HRE) approved a capital increase of nearly €3 billion (almost USD $4.2 billion) Tuesday (June 2).  The effect will be to give about 90% control to the German government—a long way toward nationalization.  The Irish Times published a short article Thursday (June 4) on the German Parliament's inquiry into HRE's collapse.

HUNGARY

The covered bonds issued by UniCredit Mortgage Bank (UniCredit Jelzalogbank) were downgraded by Moody's Investors Service Wednesday (June 3) to A3 from A1 on review for possible downgrade.  Moody's stated that the downgrade of the covered bonds was due to "(i) the deterioration of the credit strength of the Issuer and (ii) the current structure of the programme."  This concludes' the agency's review for possible downgrade initiated April 8, 2009.

ITALY

UniCredit Monday (June 8) plans to start in Milan with a roadshow on its covered bond program, which will then proceed to a number of other European countries during the course of the week.  Unicredit's bond covered bonds reportedly qualify for the purchasing program announced by the European Central Bank.

SPAIN

• Banco Popular is planning to issue a mortgage covered bond denominated in euros, according to IFR.

• The cédulas hipotecarias (Spanish legislative covered bonds) issued by Banca March were assigned definitive Aaa long-term ratings by Moody's Investors Service Wednesday (June 3).  The cover pool consists of residential mortgage loans (23.35%) and commercial mortgage loans (76.65%).

• Moody's Investors Service Tuesday (June 2) placed on review for possible downgrade its ratings of three classes of notes issued by IM Préstamos Fondos Cédulas, FTA, along with the agency's rating of the liquidity facility related to this transaction. The transaction is a static cash CBO of a pool of euro-denominated subordinated loans granted by 13 Spanish financial institutions to 14 Fondos de Titulización de Activos backed by cédulas hipotecarias (Spanish legislative mortgage covered bonds) issued by several Spanish credit institutions.

SWEDEN

The Swedish Bon Corporation Wednesday (June 3) released the final terms for issuance of an SEK 500 million floating rate note due June 2012 under its €10 billion Euro Medium Term Covered Bond Note Program.