Spain

Standard & Poor’s yesterday (Wednesday) said that a downgrade of Spain from AA+ to AA, on negative outlook, would not “automatically” trigger cuts of Spanish financial institutions’ ratings, although it downgraded five Portuguese banks on Tuesday after lowering their sovereign’s rating that day.

La Caixa built a modestly oversubscribed order book for a Eu1bn three year public sector-backed deal yesterday (Tuesday) that has been the only benchmark covered bond issuance so far this week, with the pace of supply slowing markedly in comparison with previous weeks.

La Caixa launched a three year public sector covered bond this (Tuesday) morning at levels wider than those discussed last week to take into account an underperformance of Spanish government bonds since then. Only one publicly announced mandate remains in the pipeline, with volcanic ash potentially disrupting preparations for further supply.

La Caixa is expected to launch a cédulas territoriales transaction tomorrow (Tuesday), with benchmark covered bond issuance absent so far today in markets where risk appetite has reduced, partly unsettled by the levelling of fraud charges against Goldman Sachs.

Intesa Sanpaolo yesterday (Thursday) launched the first benchmark off its public sector covered bond programme, a Eu2bn seven year deal that surpassed the size initially targeted by the issuer, and will now focus on readying a mortgage-backed programme for issuance in the coming months. Meanwhile, Caisse de Refinancement de l’Habitat added Eu800m to a 3.75% 2020 issue and La Caixa today announced a mandate.

Intesa Sanpaolo has launched its inaugural covered bond, a Eu2bn seven year Italian public sector deal that will be priced at 50bp over mid-swaps, in line with guidance, later today (Thursday). Meanwhile, France’s Caisse de Refinancement de l’Habitat has reopened a 2020 issue and Spanish savings bank Caja Murcia is on a roadshow.

Helaba will today (Wednesday) price its first jumbo Pfandbrief in six years, a Eu1bn seven year issue that, in the words of one syndicate official, met with a “complete stampede” for paper. Meanwhile, Ibercaja priced a Eu500m five year deal and Intesa Sanpaolo is expected to make its debut shortly.

Dexia Municipal Agency built an order book in excess of Eu1.25bn for a five year obligations foncières issue this (Tuesday) morning, while demand for new Spanish supply was subdued. A German bank, meanwhile, is expected to firm up plans shortly that will make it the sixth issuer to tap the covered bond market this week.

Three issuers this (Monday) morning launched or tapped benchmark covered bonds in a market buoyed by an agreement over the weekend on terms of an emergency loans package for Greece. Meanwhile, Dexia Municipal Agency has mandated for a deal that could be launched tomorrow (Tuesday).

Spread guidance on new issues launched this (Wednesday) morning was wider than levels heard yesterday, but with re-offers ultimately fixed at the tight end of guidance, syndicate bankers were speaking of a good day for covered bonds. Meanwhile, Spanish supply emerged in the form of two taps.

Standard & Poor’s yesterday (Wednesday) affirmed mortgage-backed cédulas issued by La Caixa at AAA, on stable outlook, completing for the first time a review of Spanish covered bonds under its new rating methodology.

Despite having fallen short of a Eu1bn target size, Bancaja completed its scheduled benchmark funding for 2010 with the launch of a Eu750m three year cédulas hipotecarias yesterday (Tuesday), an official at the savings bank told The Cover, while other Spanish issuers have yet to access the covered bond market ahead of forthcoming maturities.