Société Générale has set up a covered bond issuer under Luxembourg’s framework and is in discussions with S&P about rating a Eu10bn programme. HSBC Trinkaus analysts noted that it is one of as many as 16 newcomers this year, with others ranging from Austria to Panama.

Société Générale Lettres de Gage received a licence from the Luxembourg Treasury in December 2011, according to the 2011 annual report of SG Bank & Trust, and a prospectus for a Eu10bn lettres de gage programme was filed with the Luxembourg financial supervisory authority (Commission de Surveillance du Secteur Financier, CCSF) in June.

The Covered Bond Report understands that the issuer is in discussions with Standard & Poor’s about rating the programme, and that it has assigned public sector assets to the cover pool.

Société Générale already issues public sector backed covered bonds, under the French legal framework through SG Société de Crédit Foncier (SCF). According to a 29 June cover pool report the programme’s Eu12.6bn of collateral comprises 89.7% French exposure, with the balance split between Spanish regions, Belgian regions, US sovereign-guaranteed, Gulf Co-operation Council area sovereign-guaranteed, a supranational, and Germany (“Euler/Exposure with export credit agency”).

HSBC Trinkaus analysts said that SG LDG will probably be the only covered bond newcomer this year to offer public sector collateral.

They count eight new euro covered bond issuers since the beginning of the year, not including Commerzbank as the successor to Deutsche Schiffsbank and Kutxabank as the outcome of a Spanish merger. These eight are: Commonwealth Bank of Australia, BKS Bank, Caja Rural Granada, Caja Rural Navarra, Landessparkasse zu Oldenburg, Suncorp Metway, Deutsche Bank SA, and Nassauische Sparkasse.

And eight more are in the starting blocks, according to the analysts, who include a US dollar denominated structured issue targeted by Panama’s Global Bank in their list: Santander Consumer Bank, Sparkasse Dinslaken, Sparkasse Oberhausen, Ålandsbanken, Crédit Agricole Export Credit Agency SCF, Natixis Pfandbriefbank, and SG LDG.

(Previous coverage of some of the aforementioned issuers can be found by clicking on the hyperlinked names.)

Sparkasse Dinslaken obtained a licence to issue Pfandbriefe from the German central bank in March 2011, they said, while Sparkasse Oberhausen does not appear to have been granted a licence yet, but is according to a 2012 report planning to participate in a Pfandbrief pooling transaction.

BKS Bank issued its first fundierte Bankschuldverschreibung, one of the two main types of legislative covered bonds that can be issued by Austrian financial institutions, in February, according to the HSBC Trinkaus analysts. They put its issuance at Eu8m.

BKS Bank flagged plans to issue covered bonds in its 2011 annual report, noting that it had been able to turn to the funding instrument as a result of several changes, including a revamping of its securities operations, which contributed towards its strategic goal of further reducing its dependence on the interbank market as a source of funds.

In the annual report it said that raising funds by issuing its own securities was a major priority in 2011, and that it looked into the possibility of issuing covered bonds to make its debt issuance programme more attractive in the future.

“By the end of 2011, we had created the prerequisites and obtained the necessary permissions for the issuance of such bonds,” it said. “These products should help us increase issuance volumes in 2012.”

It also noted that attractive debt capital market issues, including covered bonds, will help strengthen its funding base.

The BKS Bank group had assets totalling Eu6.62bn as at the end of March.