Spain

Fitch yesterday (Tuesday) placed on rating watch negative 48 of the 54 multi-cédulas it put under analysis in December and affirmed the remaining six at AAA. In the absence of remedial action, the issues placed on rating watch negative are in the majority of cases likely to be cut to between AA+ and AA-, said the rating agency.

Banco Santander closed the books on a Eu1bn five year cédulas hipotecarias issue yesterday (Tuesday) afternoon after five-and-a-half hours of bookbuilding, with orders only just matching the deal size.

Banco Santander opened books on a five year cédulas hipotecarias with guidance of the 50bp over mid-swaps area this (Tuesday) morning, surprising market participants because a 10 year issue had initially been expected. Meanwhile, Dexia Municipal Agency is said to be preparing a 12 year benchmark.

The first new mandate of the week is expected to be announced soon and its reception could give an indication as to whether or not the record pace of the past fortnight can be sustained, or whether the difficulties faced by some issuers last week will resurface.

Banco de Sabadell on Monday returned to the benchmark covered bond market after an absence of more than a year-and-a-half. The issuer told The Cover that it announced its deal after watching the market get off to a strong start, and is confident that, after a spell of market indigestion, its issue will perform in the long run.

Three issuers announced mandates this (Monday) morning, ensuring that the pipeline remains bulging even after three issuers closed books on new issues, as the pace of supply showed no sign of relenting in the second week of the new year.

Next week promises to be as busy as this week’s record opening to a year, with two more issuers having officially announced plans for benchmarks in the past 24 hours on top of three outstanding mandates. Supply of Eu5.5bn yesterday (Thursday) took the week’s total to Eu10.25bn from seven deals, just short of the eight totalling Eu11bn in the busiest ever week for the covered bond market at the end of September.

Bankers said that Banco Bilbao Vizcaya Argentaria turned over a new leaf with the first Spanish covered bond of the year today (Tuesday), a benchmark transaction that – like deals for BNP Paribas and Dexia Kommunalbank Deutschland – is set to be priced at the tight end of guidance on the back of an oversubscribed order book. The trio of deals mark the reopening of the jumbo market in 2010.

Issuers are limbering up to launch the first benchmark covered bonds of 2010, with three institutions having mandated for transactions that could hit the market this week and others busy with preparations.

Moody’s downgraded 45 series of multi-cédulas yesterday (Thursday), hitting the only segment of the covered bond market not to have faced any reviews as a result of Standard & Poor’s revised criteria, which were announced on Wednesday.

Fifty-four multi-cédulas are under analysis by Fitch after the rating agency on Friday announced new rating criteria for the asset class to harmonise them with RMBS and SME CDOs and taking into account Spain’s updated covered bond framework.