NETHERLANDS - Achmea Hypotheekbank has said it will issue a €10bn covered bond programme aimed at institutional investors.

The scheme, which received a AAA credit rating from Standard & Poor (S&P), is the first of its kind set up by Achmea.

"The first issuance of the covered bonds will be next week. It will consist of €1bn to €1.5bn," Rudi Kramer, manager group capital management and treasuries, told IPE.
Achmea expects a yearly funding need of  €2.5 to €3bn, he added.

Kramer declined to give an indication on the pricing. "This will be decided next week," he said.

The bonds - to be issued by Achmea - will be direct, unsecured and unconditional obligations of Achmea. They will benefit from an asset-backed guarantee from Achmea Covered Bond Co BV (CBC), a Dutch Special Purpose Enterprise that guarantees the issuer's obligations, according to S&P.

The obligations of CBC will be indirectly secured through a parallel debt of a pledge of CBC's secured property to the trustee.

At present, there is no legislative framework for covered bonds in the Netherlands, although Dutch institutions such as ABP do invest in foreign such issuances. Achmea has reproduced major characteristics of the first covered bonds using existing Dutch law, issued by ABN Amro last year. Kramer explained that the structure and the underlying pool of mortgages of the program are quite similar.

"We think we are offering an attractive product, because of the security we offer. That is why we have received S&P's highest rating," he stated.

"Dutch covered bonds are more structurally diverse than those issued where there is an existing legal framework. Each Dutch structure is therefore issuer-specific," S&P commented. This is the second covered bond program in the Netherlands rated by the agency.