Seemingly impervious to wider credit market woes, the Covered Bond sector goes from strength to strength – offering borrowers reliable access to cheap funding and providing investors with a high-grade substitute for government or agency debt. Though many a sales desk may trumpet the sector's legally or contractually assigned virtue – that imposes a more credible degree of fiscal discipline than governments adhere to under their self-serving Stability & Growth Pact – it is naturally not as liquid as government bonds. To date, liquidity is...Read more
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The need to offer liquidity may have given rise to the so-called “head-to-head” wholesale market, but detractors say it is antiquated and that liquidity would be better served by improving the broker market. Furthermore, with borrowers reluctant to tap existing issues, benchmarks will become more susceptible to being squeezed. William Thornhill explores the liquidity conundrum.
Toni Moss and Shirley Jackson, founders of independent advisory and market-positioning firm EuroCatalyst, launched a think tank in 2002 to accelerate the development of European mortgage markets in the context of globalisation. IFR’s William Thornhill met up with them.
The Irish system for asset coverage monitoring is held up as an exemplary model that would seem to offer investors superior protection. William Thornhill outlines the main features and how this compares with other jurisdictions.
The jumbo covered bond market started life 10 years ago in Germany. After the country overcame concerns over its real estate sector with a change of law, new jurisdictions came on board in quick succession with their own formats, bringing diversity and depth. William Thornhill recounts the highs and lows of the last decade.
Spanish cedulas overcollateralisation continues to fall, and in the case of smaller savings banks appears to be getting close to the legal minimum. Willliam Thornhill asks whether cedulas holders should be concerned, what rating agencies are looking at, and the prospects for future supply.
Earlier this year the FSA held a couple of exploratory meetings, to sound out the banking and mortgage industry on the 4% of asset value soft cap to covered bond issuance, along with a UCITS 22.4 compliant regime and the preferential risk-weighting that it entails. William Thornhill looks at the main points discussed.
At the Eurocatalyst annual conference held last year in Berlin, ABN AMRO’s Tim Skeet introduced a panel of German investors and analysts with reference to an anniversary of a significant event fought 200 years ago. Skeet expands here on this historical perspective.
The covered bond family continues to expand, with new jurisdictions and borrowers coming on stream. William Thornhill outlines the major developments in the recently established, already established and yet to be approved jurisdictions.
The UK's fourth largest mortgage lender and seventh largest retail bank, Nationwide, is poised to join the UK covered bond market this year with a €14bn issuance programme arranged by Barclays Capital and Deutsche Bank. With some of the cleanest mortgage collateral in any market, Nationwide should be a shoe-in to the ranks of the benchmark issuers, as Joti Mangat reports.
With a 10.4% market share of mortgage stock, Abbey is the UK's second largest mortgage lender, now owned by Spain’s Banco Santander Central Hispano. While set to become the first new name in the UK sector for more than a year, any suggestion that its plans might signal the beginnings of cross-border asset pools appear premature, as Helen Bartholomew reports.
The jumbo family continues to grow as more issuers seek to reap the benefits of putting assets to work in an efficient manner that offers the liquidity that investors crave. The Nordic region has so far been notable by its absence, although this is about to change, as Philip Wright reports.
With its €1bn 10-year in February 2005, Banco Pastor became the 11th issuer of cedulas hipotecarias. Despite early fears that Moody’s’defunct notching approach might undervalue its collateral strength, recent methodological reforms mean that Spain's lowest rated cedulas issuer could soon join the Triple A club. Joti Mangat reports.