CHAMPAGNE CORKS WERE popping in Lisbon on October 2 to herald the smooth passage of Portugals covered bond legislation.
The country certainly took an unusual approach right from the start when it decided to kick off the process by passing a law that applies to one issuer alone, Cassa Depositi e Prestiti. This law (article 5/18 of Law 296) was passed in September 2003 but it was not until March 2005 that CDPs debut issue was launched and panned. Widely criticized as late and far too aggressively priced for its 20% risk weighting, the debut deal from CDPs 20 billion covered bond programme managed just 1 billion in size and was far from the benchmark that the market had been hoping for.
The issuers reputation was, however, subsequently salvaged with a successful 3 billion seven-year issue in October 2005 and...