Euro-denominated covered bonds of at least €3 billion in size from benchmark issuers are eligible for listing on EuroCredit MTS. To be considered as benchmark, the issuer must issue a further €3 billion covered bond every year, or have at least €10 billion in total outstanding debt, or €8 billion with the commitment to reach €10 billion within 12 months from first listing.
Seven banks must also opt to quote an eligible bond before it can be listed, so that the final range of benchmarks on the platform reflects the commitment of the bond dealer community. By amending the definition of benchmark issuers in order to recognize the substantial potential for issuance of covered bonds by UK issuers, EuroCredit MTS has provided dealers with a means for efficiently trading and expanding Europe's range of benchmark covered bonds.
"MTS has long been a leader in implementing changes that recognize market evolution," said Gianluca Garbi, Chief Executive Officer of EuroMTS. "There is huge potential for the UK mortgage-covered bond market, given that the UK is second only to Germany in terms of residential mortgages. With its inaugural transaction, HBOS will be the first UK issuer to be listed on the MTS platform, and we anticipate that other UK issuers will follow."
Richard Shrimpton, Co-Head of Debt Capital Markets at HBOS, said: "We are pleased to see our inaugural euro covered bond transaction listed on the EuroCredit MTS platform. The commitment of market makers to quote the bond on the platform will enhance the transparency and liquidity of the bond. In addition, the objective listing criteria of EuroCredit MTS will encourage the continued development of a distinct pan-European covered bond market with well-recognised benchmark issuers, something that will benefit all parties."
EuroCredit MTS lists approximately 25% of the jumbo Pfandbriefe, Cedulas and Obligations Foncières covered bond market (measured by outstanding bond size), with a cumulative outstanding listed bond size in excess of €110 billion. Growth in turnover was 20% over the past 12 months, pointing to the continued success of EuroCredit MTS.
