Spain

Fitch yesterday (Tuesday) downgraded the long term rating of Banco Popular Español from AA- to A, on stable outlook, because of deterioration in the bank’s asset quality and its effect on operating profitability.

Standard & Poor’s on Friday placed Banco de Sabadell’s A rating on CreditWatch negative on news that the Spanish bank is in merger talks with Banco Guipuzcoano. It also kept Caja Madrid’s A rating on CreditWatch negative on the addition of Bancaja to its group of potential merger partners.

Standard & Poor’s has affirmed at AAA mortgage covered bonds issued by Eurohypo and Barclays’ Spanish arm under its new rating criteria, and assigned the ratings a stable outlook.

Caja Madrid yesterday (Wednesday) became only the second issuer to have its covered bonds upgraded by Standard & Poor’s upon implementation of the rating agency’s new methodology. This means that all cédulas, either single or multi-issuer, rated by S&P are now AAA.

Fitch downgraded three Spanish financial institutions yesterday (Tuesday) afternoon, while Standard & Poor’s put Caja Madrid on CreditWatch negative.

Fitch downgraded Banco de Sabadell’s rating from A+ to A, with a stable outlook, today (Tuesday) because of a deterioration in the bank’s asset quality and Spain’s weak economic environment.

Moody’s and Fitch yesterday (Wednesday) said that the takeover of CajaSur by the Spanish authorities has not affected the ratings of either covered bonds issued directly by the savings bank or those it participates in.

Fitch put CajaSur on Rating Watch Positive yesterday (Monday) after the Banco de España put the Spanish savings bank under the control of the Fund for the Orderly Restructuring of Banks (FROB).

The Banco de España has announced that CajaSur is being taken under the control of Spain’s Fund for the Orderly Restructuring of Banks (FROB), after merger discussions with Unicaja ended.

A merger of Caixa Catalunya, Caixa Manresa and Caixa Tarragona approved by the banks on Monday will create a new entity that will be the fourth largest Spanish savings bank. The transaction is the first major savings bank merger approved by the Bank of Spain and the European Commission, according to Caixa Catalunya.

Moody’s downgraded five multi-cédulas issues yesterday (Monday) because of a significant weakening of the credit strength of some of the participating issuers and “quite pronounced” deterioration of the quality of the collateral.