The covered bond market grew strongly in the period 1995-2008 spreading from its original jurisdictions of Germany and Denmark throughout continental Europe and on to the UK, US, Canada and Asia. Following the collapse of Lehman Brothers, the market, in common with many other markets, suffered severe spread widening and a lack of liquidity. Although public markets where subdued, the number of issuers doubled during 2008/09 as financial institutions found the need to tap central bank repo facilities through covered bonds programmes. 2010 has seen a moderate return of public issuance in a market which has been strongly supported by the ECB and individual central banks. Over the next few years covered bonds are expected to be the major source of term funding for financial institutions. This Euromoney training course is designed both for those that are new to covered bonds and also for issuers or investors who wish to add to their know-how and understand the latest developments in, and the forces driving, the postcrisis market.

Attend this comprehensive 3-day course presenting all aspects of covered bonds for
issuers, investors, structures and analysts and you will:

• Learn the key features of one of the top three global fixed income markets.
• Understand why the market uniquely combines major key characteristics of
  unsecured funding and asset securitisation.
• Assess the legal and regulatory factors in the principle covered bond
  jurisdictions.
• Evaluate the different rating agency approaches and methodologies to
  covered bonds.
• Explore the importance of ECB intervention in European covered bond
  markets and the effect on pricing and liquidity.
• PLUS: Real-life insights and presentations from expert practitioners from
  some of Europe’s biggest covered bonds issuers.

This course has been specifically designed for the benefit of:

• Structurers
• Issuers
• Investors
• Analysts
• Rating Agencies
• Bank Supervisors
• Regulators

Supported by:

Guest Speakers: Neil Sankoff, Head of Senior Funding, Global Balance Sheet Management, HSBC

Tim Skeet, Managing Director, Head of Covered Bonds, Bank of America Merrill Lynch

Day 1

Registration commences at 8:30 on day one

Programme runs from 9:00 - 5:00 daily

Introduction

· Identify existing knowledge of covered bonds

Fundamental Features of Covered Bonds

• Key characteristics of covered bonds
• The legal basis
• regulated covered bonds
• structured covered bonds

Distinguishing Covered Bonds from other Bank Funding Tools

• unsecured senior debt
• distinction between covered bonds and RMBS

Collateral Assets

· Kinds of covered bonds issued to date:

• residential mortgages
•  commercial mortgages
• public sector debt
• aircraft and shipping
• mixed portfolio’s

GUEST SPEAKER PRESENTATION The Issuers’ Perspective and Process · Why issue covered bonds? · Establishing a covered bond programme · Issuing a euro benchmark Neil Sankoff, Head of Senior Funding, Global Balance Sheet Management, HSBC

Covered Bond Markets

· Geographic spread of covered bond issuance

· Jumbo and benchmark covered bonds

· Market size and country breakdown

The Principal Markets – Germany

· The legal framework

· The regulatory framework

· Typical issuing structure

· Covered pool asset types

· The market

Standard and Poor’s Covered Bond Methodology

· The new approach post December 2009 revision to methodology

· The five risks that make up the S&P’s analysis

• asset risk
• cash flow risk
• legal risk
• operational and administrative risk
• counterparty risk
• typical issuing structure
• eligible asset classes
• bondholders legal privilege
• regulation and supervision

Day 2

The Principal Markets – France

· The legal framework

· Typical issuing structure

· Eligible collateral and mixing

· Bondholders legal privilege

· Regulation and supervision

Fitch Covered Bond Methodology

· New approach developed during 2009

· Three key factors:

• probability of default
• ability to maintain payments following a default
• recovery prospects from default to maturity

GUEST SPEAKER PRESENTATION Running For Cover- Another Year for the Asset Class in Times of Trouble · What were the surprises for 2010 and how did markets react? · The covered bond investor base in 2010 - how did it develop and what changed? · Regulatory developments and how they have impacted the market - is there a plan somewhere? · The fragmentation of the market - how many pieces today? · The outlook for 2011 - where is this market going? · Should issuers be upbeat? What else might go wrong? Tim Skeet, Managing Director, Head of Covered Bonds, Bank of America Merrill Lynch

Investing in Covered Bonds

· Country risk and yield appetite

· Asset type

· Duration risk

· Re-finance risk

· Rating volatility/notches of safety

· Pricing and risk weighting

Day 3

Moody’s Covered Bond Rating Methodology

· 2005 methodology with 2010 update

· Two-stage process:

• probability of default
• timely payment indicators
• haircuts for highly rated issuers

The Principal Markets – Spain

· The legal framework

· Three broad types

· Eligible assets and coverage ratios

· The regulatory framework

Central Bank Support for the Covered Bond Market

· The big picture: ECB total support - the time line

· ECB repo programme

· ECB covered bond purchasing programme

· ECB securities market programme

· BoE special liquidity scheme

· BoE open market operations

· Discount window facility

· HM Treasury credit guarantee scheme

· ECB/BoE comparison of intervention

· Unwinding previous intervention

Course Summary, Delegate Feedback and Close

• Bruce Gaitskell

  Bruce Gaitskell specialises in securitisation and corporate finance. He has been involved in the European securitisation market for over 20 years, completing Europe's first rated securitisation in 1987 as Securitisation Controller for National Home Loans. He continued his early securitisation career on the issuer side and did a number of ground-breaking transactions for CIBC including Europe's first CP funded securitisation. In 1991, he became Executive Director and head of European Securitisation at UBS Limited where he was responsible for the autoloan securitisation by Nissan UK and Europe's first securitisation of vehicle leases (Truck Funding for DAF(UK)). Subsequently, he became Head of Securitisation for Diawa Europe Limited, Sakura Finance International and National Australia Bank. Bruce has been a regular conference speaker around the world on securitisation topics and teaches at a number of securitisation seminars and courses. In addition he is a contributing author to three securitisation textbooks.

  Courses run by this instructor

  • Asset Securitisation Post Credit Crisis

• Neil Sankoff

  Head of Senior Funding, Global Balance Sheet Management
  HSBC

  Neil joined HSBC in 2005 and helped establish the HSBC Bank plc and HSBC France covered bond programmes. Prior to joining HSBC he worked as a capital markets lawyer, including four years with the International Securitisation Group at Clifford Chance. Neil has been an active member of the European Covered Bond Council for several years and is currently the UK issuer representative on the Steering Committee

• Tim Skeet

  Managing Director, Head of Covered Bonds
  Bank of America Merrill Lynch

  Tim Skeet started working in the City of London in 1981 and is currently a Managing Director and Head of Covered Bonds at Bank of America Merrill Lynch. He is a frequent contributor and speaker at industry conferences, media broadcasts and other events. Tim has broad experience of the capital markets, where he has worked since 1985 and has a wide knowledge of both US and European debt markets. In particular, Tim has worked in the covered bond sector since the mid-1990s when the Jumbo was first introduced.

  Tim graduated from Jesus College, Cambridge with a degree in Modern Languages, speaks French and German and is married with three teenage children.

Covered Bonds

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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