LONDON, June 8 (Reuters) - Royal Bank of Scotland RBS.L has sounded out investors on a possible debut covered bond issue, bankers and investors said on Tuesday.
The UK bank already has approval from the UK Financial Services Authority to issue covered bonds, which are a relatively low-cost funding tool for banks.
Covered bonds are backed by mortgages or public sector loans that remain on the issuing bank’s balance sheet.
Royal Bank held roadshows with investors at the end of May and has continued to “test the waters” with investors, bankers said. “They have been marketing to investors, but there is no timeframe yet,” said one syndicate banker.
On Tuesday, Fitch Ratings said it had assigned Royal Bank of Scotland’s mortgage covered bond programme an expected AAA rating.
A Royal Bank of Scotland spokeswoman declined to comment.
The corporate bond markets have seen a spate of covered bond issues this week and last from banks mainly from Europe’s “core” countries. [NEW/EUB]. (Reporting by Jane Merriman, editing by Will Waterman)
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