S&P: ECBC Label Hasn't Impacted Covered Bonds Vol.

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The European Covered Bond Council’s labeling initiative needs a broader market take-up in order to meaningfully impact volumes, said analysts at Standard &Poor’s.

The ECBC established the covered bond label foundation in 2012. At this stage, 14 national transparency templates, 66 issuer profiles and information on 80 labeled cover pools with issuance data on over 4,000 covered bonds amounting to a total face value of over €1.4 trillion ($1.8 trillion) are available to the market, according to the ECBC website.

However some major market players aren’t as keen to participate in the initiative. German issuers, for example,a lready provide asset-level information under Pfandbrief law, and see little value in the label. According to S&P, only 2 issuers have signed up so far.

Market participants also reported that some banks have received the label without fulfilling the necessary disclosure requirements, and the templates vary nationally—potentially reducing the usefulness of the initiative, said S&P.

Investor-placed benchmark volumes for covered bonds was €4 billion ($5.19 billion) from 5 transactions that came to market in February—down from €22 billion in January and €24 billion in Feb. 2012, according to figures reported by J.P. Morgan.    

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