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Irish covered bond issuance to top €10 billion in 2007 Back  
The Irish market is set to continue to grow over the coming year, with the possibility of a new issuer, Anglo Irish Bank. Issuance in the Irish asset covered securities (ACS) is expected to total €10 billion in 2007, up from €9.5 billion in 2006, according to a research report from Barclays Capital.
Issuance in the Irish asset covered securities (ACS) is expected to total 410 billion in 2007, up from €9.5 billion in 2006, and it is likely to be driven by the three main players in the market, Depfa ACS Bank, Bank of Ireland Mortgage Bank and Allied Irish Banks, according to a research report from Barclays Capital.

Barclays doesn't expect any new names to emerge in 2007.
'Even though examples, such as Depfa ACS Bank and WestLB Covered Bond Bank, underline that the Irish framework has a strong appeal to foreign credit institutions, several countries have meanwhile developed covered bond legislation that mirrors the strength of the Irish legislation. Thus, we do not expect other non-Irish originators to establish public sector covered bond programmes in Ireland,' the report states. In 2006, jumbo covered bonds in four new countries - Hungary, Portugal, Sweden and the US - were issued.

On the public sector side, Barclays maintains that, 'given reduced balance sheet growth of both public sector ACS issuers, we basically expect steady issuance of public sector ACS, particularly with a persistent share of USD denominated funding'.

With regard to the issuance of mortgage ACS, Barclays expects supply to be mainly driven by the two existing issuers, AIB and Bank of Ireland, with the planned amendments to the ACS legislation potentially facilitating issuers of mortgage ACS to tap into a broader range of collateral.
In December 2006, AIB launched its third ACS transaction, under its €15 billion mortgage covered securities programme.

From a European perspective, Barclays predicts that the gross supply of jumbo covered bonds will total €220 billion in 2007, following on from a record 2006, with the largest proportion likely to be issued out of Spain (€63bn) and Germany (€35bn). The investment bank also expects issues from US banks to continue in 2007, following the launch of the first-ever US covered bond in September 2006.

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