Washington Mutual to issue covered bonds
Washington Mutual Bank (WMB) will become the first US bank to issue covered bonds. The first €3 billion issuance of what is expected to be a €20 billion programme is scheduled to be priced at the end of the month. WMB is the third largest residential mortgage originator in the US.
“Issuing covered bonds marks a significant departure from WMB’s more traditional funding sources, notably the Federal Home Loan Banking (FHLB) system,” said Todd Niemy, credit analyst at Standard & Poor’s in New York. “While WMB’s management has confirmed to us that it plans to continue to use the FHLB system in future, it recognises certain long-term funding advantages of this innovative new funding source.”The deal was arranged by Barclays Capital, which will lead-manage it with ABN Amro and Deutsche Bank. WMB plans to come to the market four to six times per year.“In originating this programme, WMB has been able to diversify its funding sources, and crucially into the global capital markets. Furthermore, the bank will be tapping a deep and liquid covered bond market,” said Niemy. WMB’s covered bond could open up opportunities for other US mortgage lenders, although the take-up will depend on the success of this first transaction.Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
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