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EU Covered Bonds Directive Broadly Positive; Impact Uneven

 The EU's covered bonds directive broadly supports the credit quality of the asset class by setting minimum standards in key areas. In practice, existing national regulations and market conventions already meet many of these standards, but where this is not the case, the directive could be positive for some covered bond ratings. 

Italian Covered Bonds Peer Review

The five 'AA' rated Italian mortgage covered bonds programmes (Obbligazioni Bancarie Garantite, OBG) are resilient to negative rating actions on the respective banks' Issuer Default Ratings (IDRs), owing to the three-to-four-notch cushion against an issuer downgrade


Click Below for more information on the 
Italian Covered Bonds Peer Review

rating action

Fitch Rates Westpac's Series 2019-C3, C4 & C5 Mortgage Covered Bonds 'AAA'; Outlook Stable

The 'AAA' covered bond rating is based on WBC's Long-Term Issuer Default Rating (IDR) of 'AA-', an IDR uplift of zero notches, a payment continuity uplift of six notches, a recovery uplift (RU) of one notch and the asset percentage (AP) of 91.0% used in the programme's asset coverage test, which provides more protection than Fitch's breakeven AP of 91.5%. 

Mid-Sized UK Banks' Cover Pools See Stable Credit Risk

They benefit from large over-collateralisation buffers above the level supporting their current ratings and high quality mortgage cover pools. The six programmes included in the peer review are those of Coventry Building Society (Coventry), Yorkshire Building Society (Yorkshire), Leeds Building Society (Leeds), Skipton Building Society (Skipton), Clydesdale Bank plc (Clydesdale) and The Co-operative Bank Plc (Co-op).

rating action

Virgin Money's Covered Bond Final 'AAA'

With its first issue, VM has become the first UK covered bond issuer where both assets and liabilities are fully linked to the SONIA rate. The initial issue is an unhedged GBP500 million floating-rate note paying compounded SONIA with a five-year maturity and a one-year soft-bullet feature.


IBOR Transition Webinar

Available On-Demand

Fitch’s Chief Credit Officer, Jeremy Carter, and Group Credit Officer, Andreas Wilgen, discuss the progress which has been made to prepare financial markets for the discontinuation of IBOR indices and highlight the risks which still remain.


Listen Now

rating action

The Co-operative Bank's CVB on Rating Watch Negative

The covered bonds have been placed on RWN because they are rated at their maximum achievable level above Co-op's IDR and the IDR has been placed on RWN. The covered bonds rating will be impacted by any action taken on Co-op's IDR. 

Pfandbrief Law Change Shields Cover Pools from No-Deal Brexit

Amendments to German covered bond (Pfandbrief) legislation to regulate the status of UK-related cover pool exposures after Brexit mitigate risks associated with a no-deal Brexit

Covered Bond Asset Encumbrance Stable in 2018

Average weighted average cover pool encumbrance for banking groups that we rate was just below 8% of adjusted assets at end-1H18. Encumbrance has been broadly stable for the past three years, as market-placed issuance had continued in what are traditionally the largest covered bond markets

Fitch Ratings Methodology for Rating Covered Bonds

Hélène Heberlein, Managing Director and Head of Covered Bonds, Explains Fitch Ratings methodology for rating covered bonds with Euromoney’s Meet the Market segment.



Open-Ended Bond Funds a Potential Risk to Financial Stability

Open-ended bond funds are a potential risk to global financial stability given their rapid growth and increasing liquidity mismatches and credit risk.

Surveillance Snapshot

See the latest quarterly information for Fitch-rated covered bond programmes globally.

Credit Hotspot: Conditional Pass-Through Mortgage Covered Bonds

Latest: Bank of Cyprus Covered Bonds Upgraded to 'BBB' on New Data

Conditional Pass-Through Need Not Be Riskier Than Other Covered Bonds

Covered bonds with a conditional pass-through (CPT) amortisation profile are not necessarily more risky than those with other liquidity protection mechanisms, Fitch Ratings says. In fact, the pass-through feature eliminates the uncertainty and potential losses from a stressed sale of cover assets. 

2019 Outlook

CVB Ratings Resilient to Sovereign and Bank Rating Movement

Most of the covered bonds rated by Fitch have been issued by highly rated banks and sovereigns with stable ratings, which contributes to the stability of our covered bond ratings. For example German, French and Nordic covered bonds account for almost two-thirds of the covered bond market globally. In addition the programmes we rate in these countries are protected by an average four-notch buffer against a downgrade of the bank's Long-Term Issuer Default Rating (IDR).

Panama's Banco La Hipotecaria's Inaugural Covered Bonds Rated 'BBB'

There is no covered bond framework in Panama, but Fitch believes that the contractual arrangements for the program and local legal framework are effective so that the cover assets are sufficiently ring-fenced from the remaining portion of the issuer's balance sheet. 

rating action

Fitch Rates HSBC Bank Canada's Inaugural Mortgage Covered Bonds 'AAA'

As long as HBCA is solvent, it will pay the covered bond obligations when due pari passu among themselves and with their senior liabilities, irrespective of the performance of the cover assets. Should there be an issuer event of default and the guarantor receives a notice to pay, the covered bondholders also benefit from recourse against the cover assets, which become the source of payments. 

Australian CVB Market Expands; Singapore Tightens Residential Property Regulations

We believe the expansion of Australia's covered-bond market and tighter regulations on residential properties in Singapore are positive developments in the Asia-Pacific region, as outlined in the agency's most recent report, APAC Covered Bonds Quarterly - 3Q18. 


Hélène M. Heberlein


Hélène M. Heberlein

Analytical Sector Head & EMEA

+33 1 44 29 9140

Beatrice Mezza


Beatrice Mezza


+44 203 530 1273

Claire Heaton


Claire Heaton


+61 2 8256 0361

Suzanne Mistretta

North America

Suzanne Mistretta


+1 212 908 0639

Andrew Smitiuch


Andrew Smitiuch


+ 1 416 703 4824

Maria Moreno


Maria Moreno


+57 1 326 9999

Samuel Fox


Samuel Fox


+1 312 606 2307

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