Spain

Ahorro Corporación Financiera is said to be preparing an AyT Cédulas Cajas issue for launch next week that could be the biggest test of the covered bond market since the European Central Bank’s Eu60bn purchase programme was announced.

Further new issuance is on the cards for this week, despite the beginning of the European summer holiday season starting to have an impact on the pace of supply. Meanwhile, the European Central Bank has reported a further Eu43m of purchases under its programme and president Jean-Claude Trichet gave the asset class another ringing endorsement.

Standard & Poor’s placed Banco Popular Español’s cédulas hipotecarias on negative review on Friday because of “significant” cashflow gaps.

Fitch said today (Friday) that recent Spanish legislative changes have improved the country’s covered bond framework and that it will amend the Discontinuity Factors it assigns cédulas hipotecarias.

Moody's yesterday (Wednesday) confirmed the Aaa ratings of six cédulas hipotecarias programmes.

Moody’s yesterday (Tuesday) downgraded two cédulas hipotecarias and two cédulas territoriales programmes, and affirmed the Aaa ratings of three cédulas territoriales programmes. Seven other cédulas programmes and 59 series of multi-cédulas remain on review for possible downgrade.

Moody’s yesterday (Monday) cut the ratings of 25 Spanish banks, heightening the risk of downgrades to certain cédulas. However, the ratings of jumbo cédulas issued by individual banks appear safe.

The deal pipeline for next week appears surprisingly thin, said syndicate officials today (Friday), but one covered bond banker suggested that it was only deceptively so.

Buoyed by the support of investors who had been absent from the covered bond market, Banco Popular Español yesterday (Monday) afternoon priced the first jumbo since Thursday’s announcement by the European Central Bank of details of its covered bond purchase plan. And a French issuer is said to be sounding the market today (Tuesday) for a possible new issue.

Banco Popular Español has the jumbo market to itself today (Monday). The Spanish issuer is the first institution to launch a new issue after Thursday’s announcement by the European Central Bank of details of its covered bond purchase plan, with one syndicate banker saying he was surprised there was not more primary market activity in covered bonds.

Banesto yesterday (Tuesday) priced its first jumbo covered bond since February 2007, a Eu1bn four year cédulas hipotecarias that is the third Spanish benchmark to hit the market since the ECB announcement on 7 May.

Banesto is set to price a Eu1bn four year cédulas hipotecarias this (Tuesday) afternoon, with books due to close at around 1400 CET. Meanwhile, other issuers are exploring just what the market is willing and able to accept from Spain.