The ICMA Covered Bond Investor Council plans to push ahead with publishing transparency standards before the end of the year, although there was a warning at a European Covered Bond Council plenary last Wednesday that bringing the initiative to fruition would be like turning around a supertanker.

Investors discuss CBIC plans

Claus Tofte Nielsen, chairman of the CBIC, told The Covered Bond Report that the investor body would in the coming months be working on feedback received during a consultation held in the second quarter, and then publish the list of information that it would like issuers to disclose by year-end.

SG’s Ralf Grossmann, chairman of the ECBC’s technical issues working group, said at the plenary in Barcelona last week that the ECBC has made a lot of progress on the CBIC’s plan since the last plenary, in Stockholm in March. He said that issuers providing data would also form a part of the covered bond labelling initiative.

With Europe-wide standards impractical, Grossmann said that national associations were now working to come up with templates aimed at meeting the CBIC’s wishes. The ECBC has already been conducting a “traffic lights” survey to find out what items in the CBIC’s proposed list they can or cannot provide information on.

But Deutsche Bank’s Mauricio Noe, a member of the ECBC steering committee and moderator of a panel on the subject, said that although the CBIC initiative was “very firmly on the agenda” and would have “a lasting effect on our market”, it could not happen overnight and that in this respect the covered bond market was rather like a supertanker.

He said that a fairly consistent message he had been hearing was that “Claus’s list is a very extensive list”.

“It’s a Christmas list, effectively,” said Noe.

The Association of German Mortgage Banks’ Jens Tolckmitt said at the plenary that investors’ views on what information they required varied widely, with there being very little common ground between them – although the vdp did push for these needs to be served when the Pfandbrief Act was amended.

Lloyds’ Gary Staines said that as new credit investors were entering the asset class, they were demanding more data to analyse. But he said that hardly anyone had looked at the issuer’s covered bond website.

But Crédit Agricole analyst Florian Eichert said that some new investors would simply not give any credit to the cover pool in pricing terms if they were not given sufficient data

Nielsen told The CBR that a wish-list was exactly what the transparency standards were always designed to be.

He said that he realised that some issuers – in Germany, for example – might be able to rely on domestic investors who did not require so much data.

“I’m quite relaxed about that,” said Nielsen.

But he said that the initiative reflected the needs of international investors and that it was up to issuers if they decided to follow it.

Michel Stubbe, head of the market operations analysis division at the European Central Bank, said that the CBIC initiative was very important and could help reduce reliance on the rating agencies by allowing investors to make more autonomous analyses.