Spain

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.

Moody’s yesterday (Wednesday) placed on review for possible downgrade the Aaa ratings of seven cédulas hipotecarias programmes, four cédulas territoriales programmes and 57 series of multi-cédulas.

Moody’s yesterday (Tuesday) put on review for downgrade the senior ratings of 34 Spanish banks because it expects their asset quality to continue to deteriorate, resulting in significantly higher credit losses than were previously incorporated in the ratings, straining capitalisation. The move threatens the ratings of some cédulas hipotecarias.

La Caixa yesterday (Thursday) rounded off with a flourish the busiest week in the covered bond market since May 2008, pricing a Eu1.25bn five year cédulas hipotecarias flat to Santander, even though market participants had said that such pricing was aggressive. Meanwhile, a French issuer tapped the market much tighter than two weeks ago and a Dutch name is said to be preparing to go out on the road.

The books on a five year cédulas hipotecarias for La Caixa are due to close at 1430 CET today (Thursday), with pricing fixed at flat to the level at which Santander reopened the Spanish market on Monday.