Spain

The benchmark covered bond market is set to experience a welcome slowdown this week, with Abbey National the only issuer widely expected to launch a deal as others busy themselves with the preparatory work of meeting with investors.

A Eu1bn five year cédulas hipotecarias for Banco Bilbao Vizcaya Argentaria priced at the wide end of guidance could signal a welcome leveling of the balance of power between investors and issuers in the covered bond market, according to one banker this (Wednesday) morning. Meanwhile Danske is in the market with a new issue, National Bank of Greece has completed the first Greek benchmark, and we include here a wrap-up of some distribution statistics from earlier in the week. [Updated to correct BBVA pricing.]

Banco Bilbao Vizcaya Argentaria is understood to have gathered more than Eu1bn of orders for a five year issue that is officially being marketed at 28bp-30bp over mid-swaps.

Caja Madrid yesterday (Thursday) priced the biggest Spanish covered bond issue since May 2008, but one that, according to a syndicate official at one of the leads, prudently balanced size and price.

Stadshypotek this (Thursday) morning reopened the Swedish covered bond segment with a five year benchmark, while Caja Madrid will this afternoon price its first issue of the year, a Eu1.75bn seven year cédulas hipotecarias. Meanwhile, UBS has announced the mandate for its debut.

CajaSur has issued the lowest rated Spanish covered bond, a Eu400m five year floating rate note rated A1 by Moody’s. Meanwhile, buybacks announced by La Caixa take its total for this year to more than Eu1.35bn.

Bilbao Bizkaia Kutxa will this (Tuesday) afternoon price its Eu1bn five year cédulas hipotecarias debut at 58bp over mid-swaps, a “punchy” level that bankers said signalled that pricing expectations might need to be revised tighter. And a tighter level than expected is already being rumoured on the first of several new issues in the pipeline, which includes Dutch, Portuguese and Italian supply.

Fitch changed its outlook on Cajamar Caja Rural, Sociedad Cooperativa de Crédito from stable to negative yesterday (Monday) to reflect its deteriorating asset quality, exposure to the construction and real estate sectors, and a need to further rebalance funding towards customer deposits.

Banco Pastor yesterday (Thursday) launched a Eu1bn four and a half year cédulas hipotecarias in its first visit to the jumbo covered bond market since September 2006. The issue is the first not to have been priced at the tight end of guidance since the market reopened after the summer break, but the issuer told The Cover that it is happy with the level.

Banco Pastor is pricing a Eu1bn four and a half year cédulas hipotecarias issue this (Thursday) afternoon at 75bp over mid-swaps, after confirming the mandate for its new issue yesterday (Wednesday) afternoon.

Bank of Ireland as good as signalled the complete recovery of the covered bond market, in terms of access at least, by launching a Eu1.5bn five year deal that is the first Irish issue in the public markets since June 2007. And while spreads for such issuers may remain at unprecedented levels, the strong rally is nevertheless encouraging many credits to explore possible new issues.

Banesto (Banco Español de Crédito) yesterday (Wednesday) secured the tightest level for a cédulas since the market reopened in May when it priced a Eu1.25bn three and half year mortgage-backed issue at 45bp over mid-swaps. The issuer told The Cover that while other institutions may be waiting for spreads to tighten further, it was happy with its decision to launch a deal in the early days after the summer break.