Wishing you the very best for a prosperous and happy New Year in 2025! .
See all the data on U.S.$ and Canadian bank covered bond activity since 2007
at
Data Tables.
Commentary
Recent Posts. See our most recent posts on covered bonds:
Jan 2025- A New Administration - eight years later another Trump
administration. What does it mean for covered bonds? Obviously way too early to tell. Once again we are hearing that the
administration
intends to move to address Fannie Mae and Freddie Mac. However, too early to know if covered bonds will
play
a role in any housing finance system, but we will be following closely.
Jan 2019- The American Banker is
reporting that “There’s now a confluence that’s been
built
around the need to really do a deep dive on national housing policy itself, which housing finance is
just
one important element,” according to David Jeffers, the executive vice president of policy and public
affairs at the Council of Federal Home Loan Banks.
Jan 2019- Urban Institute Report on U.S. Housing. See our new post (
U.S. Housing Overview.) on the Urban Institute Report on U.S. housing
and
the dominance of the GSEs in housing finance. The GSEs are virtually the only game in town.
Is
that risk to the taxpayers worth it? Why?
Dec 2018- NY Fed Study on Housing Finance The New York Federal Reserve
Bank has released an
Economic Policy Review entitled
The Appropriate Role of Government in U.S. Mortgage
Markets. Given the conservatorships of Fannie Mae and Freddie Mac, one wonders why it took
so
long to ask this question. Nevertheless, this review represents a welcome attempt to inject some
rationality into U.S. housing finance. As the Economist
reported yesterday, we have accidentally nationalized the U.S.
mortgage
market at a cost of something like one percent of GDP annually. It is high time to rely more on
the
private capital markets and less on government fiat for housing finance. The Economist believes
the
taxpayer savings would be substantial. Starting on page 63 there is a comparison of U.S. and
Danish mortgage financing and a recommendation that policy makers look at the Danish use of capital
markets
to finance mortgage loans using covered bonds.
July 2018- GSE Progress? The White House has proposed a plan for
reorganization of the Government, which includes a
plan for reorganization of the GSEs that has a
political
twist that might actually make a difference. "Reform of the Federal Role in Mortgage Finance"
begins
in page 79 of the White House proposal. The plan would fully privatize Fannie Mae and Freddie Mac
and
give them access, together with other private entities, to a Government guarantee for a fee. Under the
plan
a new Federal entity would create and regulate a market for Federal guarantees. The
interesting
political twist is that Fannie Mae and Freddie Mac would not longer be responsible for assisting low
income
borrowers. Instead that role would shift to the Department of Housing and Urban Development.
Fannie and Freddie would lose their Federal charters and would no longer be the focus of political
infighting over federal assistance for low income residential mortgage loan borrowers. Perhaps
with
the removal of that responsibility Fannie and Freddie will become less political and some real progress
could be made in creating a rational structure for providing Federal support for residential mortgage
loans.
Jan 2018- What a difference a year makes! - As we move into 2018 there isn't
a
whisper of covered bond legislation in the United States. Nothing! The resurrection of the
GSEs in their old form seems to on the agenda. Amazing how short memories are. All is
forgiven. $180 billion of bail-out cash is no big thing. We could do it again if need be,
but
of course this will never happen again. Everyone is born again! And what is the definition
of
"madness"?
Canadian
Issuers
Jan 2025- 2025 is likely to be a more active year for the Canadian banks as 2024 was a remakably slow year for them (see below).
Jan 2025-
2024 was a slow year for Canadian issuance of covered bonds. Canadian banks came to the market with 31 offerings of covered bonds in $, €, £, C$, A$ and CHF currencies compared to 69 deals in 2023. Many of those offerings were reverse inquiries of less than benchmark size. The distribution of offerings across currencies was as follows:
| Currency | # Offerings | Amount |
| € | 14 | 13,350 |
| $ | 5 | 5.075 |
| C$ | 1 | 1,000 |
| £ | 5 | 4,350 |
| A$ | 4 | 2,300 |
| CHF | 2 | 440 |
See
Canadian Issuance.
Other US$
Issuers
Jan 2025- USD offerings by non-Canadian banks was quite low in 2024. There were 10 offerings for a total of $8.9B. Only three such banks, LBBW, Santander and newcomer Shinhan Bank of Korea issued in USD. Note that issuance volume and frequency for foreign banks is largely determined by cross currency swap costs of converting the USD proceeds to their home currency.
Hot
Topics
Jan 2025- Equivalence - perhaps no topic is as important to non-EU issuers of covered bonds as equivalent treatment of their bonds for EU bank capital purposes. See, e.g., the ECBC's
statement or S&P's
statement on equivalence and Fitch's
statement that non-EU covered bonds have similar risk. The absence of equivalent treatment means that non-EU covered bonds do not price as favorably as EU covered bonds.
