HSBC plans to re-enter the UK covered bond market, with a proposed €25bn programme today (Friday) appearing on the Financial Conduct Authority Regulated Covered Bonds Register and Moody’s assigning a provisional Aaa rating to HSBC UK Bank plc mortgage covered bonds.

The programme is also listed on the covered bond section of HSBC’s website, where it notes “HSBC issues covered bonds though its UK entity HSBC UK”, although little accompanying information is available yet.

The moves come on the back of preparations previously flagged by The Covered Bond Report, with HSBC having last year incorporated entities typically used in UK programmes.

According to Moody’s provisional rating in respect of the €25bn (£21.5bn) programme, the cover pool comprises £1.962bn of residential mortgage loans. Assuming a covered bond issuance of £500m, this is equivalent to overcollateralisation of 292.5%, the rating agency noted.

HSBC previously issued Regulated Covered Bonds in the UK via HSBC Bank plc before the ring-fenced HSBC UK Bank plc was established. The prior issuer’s last benchmark covered bond was issued in 2011, but since then the group has issued via HSBC SFH (France) and HSBC Bank Canada.

The only benchmark covered bond issuance from the UK this year was a £1bn 10 year floating rate note from Nationwide Building Society on 16 February.

As in other countries, attractive central bank funding options such as the Bank of England Term Funding Scheme have reduced the need for issuers to approach the capital markets.