On the back of reassurances recently made by the Financial Services Authority that it did not intend to implement a rigid limit to covered bond issuance (see ASR 8/15/05), lenders Nationwide and Northern Rock have lined up respective deals due to come out before year-end.

"The FSA's 4% limit was always intended to be a soft limit but initially I think it created some uncertainty, especially among the smaller U.K. lenders," said one analyst at Dresdner Kleinwort Wasserstein. "I think that the market has positively viewed the [FSA's] concrete statement in its letter to the British Banker's Association and reiterates that they have a more relaxed view."

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