Cédulas spreads to tighten as asset quality weakens

By Bill Thornhill
21 Jan 2021

The Spanish government’s decision to extend laws that prohibit tenant evictions is a blow for the credit strength of the country's covered bond and mortgage securitizations. But even so, supply scarcity will continue to have more influence on Cédulas valuations and spreads, which have already tightened this year and may well have further to go.

At the end of last year the Spanish government approved regulation aimed at protecting vulnerable tenants affected by the pandemic, prohibiting evictions until May. 

The ruling is in line with a trend in housing regulation that has eroded creditors' rights reflecting the “growing relevance of social risk in housing”, ...

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