Nationwide Building Society announced a consent solicitation exercise in respect of its covered bonds today (Thursday), incorporating three proposals that the UK issuer said would bring its programme into line with other UK programmes and current market practices.

The exercise takes in 62 issues that are understood to be all the covered bonds outstanding under the Eu45bn programme.

Nationwide established its programme in 2005 and it noted today that much has changed in the market environment since then.

“Nationwide has not sought to make any material changes to the programme since its inception and, as such, these covered bondholder proposals are designed, first and foremost, to update the Programme and bring it into line with other UK Regulated Covered Bond programmes,” said the building society.

It is seeking to incorporate current rating agency swap and counterparty criteria, which it said will result in updated and simplified disclosure across the LLP’s considerable portfolio of covered bond swaps (liability side) by aligning all of these swaps with a single fully updated ISDA document and a similar separate swap agreement for the interest rate swaps (asset side).

“Nationwide is also seeking to incorporate some structural efficiencies which will help to reduce credit exposure to third parties,” it said. “These amendments should be familiar to investors from other consent exercises.

“A number of other proposals, for which there is strong existing market precedent, add features to the programme that Nationwide would introduce if it was setting up the programme afresh today. The overriding aim of the covered bondholder proposals, set out in the consent solicitation memorandum, is to ensure the programme remains a viable and effective funding tool for Nationwide to use for future covered bond issuances, while ensuring that the modifications have been reviewed and signed-off by all three rating agencies.”

It said that Moody’s, Standard & Poor’s and Fitch have reviewed the proposals and are set to announce that, if passed, they will have no negative rating impact.

The changes are split into three proposals to be voted on and consent fees are split into one cent for each proposal investors vote in favour of by an early voting deadline and that is implemented, with an additional two cents available for those investors that vote in favour of all three and all are implemented, making an aggregate of five cents available.

The early voting deadline is 10 June and a bondholder meeting has been scheduled for 21 June.

Barclays is solicitation agent and Citibank information and tabulation agent.