...Net supply of benchmark covered bonds was positive in 1Q24, as issuance was above the average of the last decade, outstripping redemption. Noteworthy Fitch-only rated new issues included UBS Switzerland AG's first jumbo mortgage covered bonds in euros. Loans in the cover pool are in Swiss francs, like outstanding covered bonds issuances. The new euro bonds are swapped into Swiss francs and investors are not at risk of recoveries given default denominated in the wrong currency, as the Swiss franc cover assets are on average shorter (4.25 years) than the new liability (five years). We therefore maintained our recovery uplift of two notches. See: No Impact on UBS Switzerland's Covered Bonds AAA Ratings from First Euro Issuance. Contagion threatened the German mortgage Pfandbrief market in February 2024 after New York Community Bank reported a loss for 4Q23 and large provisions for loans secured by office buildings. The secondary market spread for debt of German specialised mortgage lenders...
