Italy's UniCredit readies first public covered bond program for e20bn

The giant Italian banking group UniCredit is preparing its first public covered bond program with a total volume of e20bn to refinance residential mortgage loans. It follows Banco Populare di Milano, UBI Banca and Banca Carige which set up programs based on the law passed in Italy in 2007. Commerzbank-Dresdner Kleinwort said Unicredit has already issued around e5bn but this was solely issued for sale to the European Central Bank after its announced opening to covered bonds as collateral in repo business. "As residential mortgage lending is part of UniCredit's core business, covered bonds could be considered a natural source of funding, particularly since the RMBS market is still not functioning adequately," Commerzank-DKB said. (Details in PFE 127, due for publication on Monday 29 June)