Spain

Banco Popolare and Bankinter are bookbuilding for new issues today (Tuesday) amid signs that investor appetite for second tier issuers from peripheral countries could be flagging after a busy two weeks, particularly from Spain.

Caja Madrid yesterday (Tuesday) priced the biggest Spanish benchmark covered bond since the segment’s reopening this autumn, and the issuer told The Cover that several aspects of the transaction were encouraging, including its resilience to weakening market conditions on the day.

The Bank of Spain is introducing a new regulation requiring that Spanish issuers disclose detailed information on assets backing cédulas. Moody’s today (Monday) said that this should increase investors’ confidence in assessing credit risk and lower borrowers’ funding costs, even if it said that there is room for improvement, and other market participants gave qualified approval of the initiative.

Standard & Poor’s placed 53 Spanish multi-cédulas transactions on CreditWatch Negative on Friday and will review the potential impact of pressure on the creditworthiness of Spanish banks, deteriorating collateral values, and decreasing overcollateralisation available to the underlying cédulas.

La Caixa sold a Eu1bn three year cédulas hipotecarias yesterday (Thursday), with its standing helping it achieve the benchmark size in spite of pricing some market participants had considered ambitious. However, although the bank made it four cédulas in just over a week, market participants were ambivalent about the levels of subscription and the performance of the week’s supply, not only from Spain.

La Caixa this (Thursday) morning launched the fourth cédulas in a week, a three year issue that bankers away from the leads said was ambitiously priced, after Banco Sabadell yesterday became the first Spanish issuer to reach a Eu1bn deal size since July. The Spanish covered bond was the only new benchmark in the market this morning, after issuers including CM-CIC and Royal Bank of Scotland wrapped up new issues yesterday.

Banco Popular Español extended a reopening of the cédulas market yesterday (Tuesday) by becoming the first Spanish bank away from BBVA and the Santander group to launch a new deal after the summer break. The issuer told The Cover that its success reflected growing interest from international investors.

UniCredit launched its first benchmark obbligazioni bancarie garantite issue of the year this (Tuesday) morning to extend the market’s post-holiday reopening to Italy, while Spain’s Banco Popular Español is offering a record spread for a Eu500m minimum three year cédulas issue.

Banesto sized a five year cédulas hipotecarias at Eu600m yesterday (Thursday), taking Eu500m-plus covered bond issuance over the past five working days to Eu6.9bn. The Spanish issuer told The Cover that it was happy to have been able to issue successfully given how tricky the market has been.

Banesto showed the breadth of the covered bond market’s post-holiday reopening today (Thursday) with a Eu500m minimum five year cédulas hipotecarias. Meanwhile, Berlin Hyp priced a Eu500m issue in the face of low yields and spreads, while Bawag PSK finally emerged after announcing plans for a new issue back in May.

Spain’s Bancaja and Banco de Valencia have taken remedial action to support multi-cédulas in which they participate, after the banks' ratings were cut by Fitch at the beginning of June.

Fitch cut mortgage-backed covered bonds issued by Spain’s Caja Navarra from AAA to AA+ today (Wednesday), because of a downgrade of the bank’s rating from A to A- on 30 July.