The European Covered Bond Council received applications from 61 issuers for its Covered Bond Label by the end of an early bird period last Friday (28 September), but in contrast to the positive response participation from the market’s traditional stronghold of Germany remains low.

Label applications have to be made separately for each cover pool or programme, and the 61 issuers made a combined 75 cover pool applications. The 14 countries participating include Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden and the UK (see chart below for full breakdown).

“We are very pleased to see that already 75 applications from 14 countries have applied for a label,” Luca Bertalot, head of the ECBC, told The Covered Bond Report. “This underlines the strong backing of the project by the covered bond community and we expect that many other issuers will jump on the bandwagon before year-end.

“We see it also as a recognition of our work and it shows the commitment of the covered bond community to protecting the quality features of this asset class and its willingness to improve transparency and liquidity.”

The 75 applications is up from the 51 that had been put in by the time of an ECBC plenary in Munich on 12 September. There, Benjamin Sahel, market operations analysis at the European Central Bank, had expressed excitement about the project, although the consensus among a panel of varied market participants was that in its current form the label project remains something of a starting point.

Among the 61 issuers to have applied for the label only two are from Germany: UniCredit’s German arm and NordLB. LBBW analysts noted after the ECBC plenary the low participation from Germany and also from Austria, where only UniCredit’s Austrian arm has put in an application.

“In our opinion, the reason for the low demand from Germany and Austria so far may be that the standards prescribed in the two countries are more extensive than the label’s requirements,” they said. “Applying for a label may therefore appear superfluous for an issuer that enjoys a high reputation based on comprehensive national rules.”

Rafael Scholz, head of treasury at Münchener Hypothekenbank, echoed this when he told The Covered Bond Report that while he is supportive of the general idea, the issuer expects to remain outside the process for the time being.

“As a German issuer, applying now for the ECBC label does not carry much benefit because we are part of the strongest legislation in Europe,” he said.

However, Thomas Cohrs, head of syndicate and origination, financial institutions and SSAs, at NordLB, said that the issuer was happy to participate in the initiative.

“We consider the label to be supportive of the international development of the market,” he said.

Label applications breakdown by number of issuers (28/09/12)

Source: ECBC