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Covered bonds: Wachovia is the next US issuer

Buzz over US continues, but Europe still getting its act together.

Wachovia will be the second US bank to bring a covered bond to market, hot on the heels of Washington Mutual’s successful dual-tranche issue. Rumour has it that ABN Amro and Barclays Capital are in charge of the structuring of the deal. They also underwrote the WaMu deal, indicating that they are the front runners in what is presently one of the most dynamic sectors in the vanilla bond markets.

Wachovia Bank is rated Aa2/AA–/AA– by Moody’s, S&P and Fitch and is the fourth-largest bank in the US measured by market capitalization. Exact details of its intentions are at present scarce but it seems highly likely that it will follow closely the template established by its west coast compatriot. The deal is scheduled to be unveiled early this month, and will most likely include a full European roadshow.


The excitement surrounding the annual Euromoney/European Covered Bond Council congress in Madrid in early September was palpable, not least because the US market is set to take off and market participants were enthusiastic about the possibilities. Virtually all of the major European borrowers were at the gathering and those quizzed were excited at the prospect of finally getting US investors interested in a product that is second only to the treasury market in terms of outstandings.

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