Spain

The ever dwindling appetite for Spanish government-guaranteed paper was clearly evident yesterday (Monday) as Cajamar just about got a Eu1bn deal over the line, but another mandate is already out.

Aareal’s debut SoFFin-backed issue has been the highlight of government-guaranteed supply this week, while BNP Paribas is today (Wednesday) adding momentum to a reopening of the unguaranteed senior bank market.

Fitch on Friday afternoon downgraded the cédulas hipotecarias (CHs) of Caixa Catalunya and Caixanova from AAA to AA+, after cutting their issuer default ratings earlier that day. And a further cut looks in store for Caixa Catalunya if Fitch’s revised liquidity risk assumptions are implemented in their proposed form.

The European Central Bank is understood to have lifted the standing of Spain’s multi-cédulas programmes this week by upgrading them from category four to category three in its framework for deliverable collateral assets.

Caixanova got its inaugural three year government-guaranteed transaction done yesterday (Wednesday) afternoon. The Eu1bn issue via Barclays Capital, BBVA, BNP Paribas, Caja Madrid, DZ Bank and HSBC was priced at the tight end of the 85bp-90bp guidance.

Caixanova has finally opened books on its first government-guaranteed issue, albeit at the widest spread yet for a Spanish issue. Meanwhile, Dexia and Lloyds yesterday (Tuesday) set new benchmarks for size in the government-guaranteed asset class.

Dexia Crédit Local today (Tuesday) found its second visit to the government-guaranteed market easier than its first and is set to price its new issue this afternoon. Meanwhile Lloyds TSB found demand from unexpected areas in sterling and OeVAG wrapped up its four year euro.

Standard & Poor’s on Friday afternoon cut the rating of Caja Madrid’s cédulas hipotecarias from AAA to AA. Although the downgrade is under S&P’s current methodology, the action gives a foretaste of what the rating agency’s proposed new approach could bring. Meanwhile the Spanish banking system continues to suffer negative ratings news.

The pace of government-guaranteed issuance picked up today (Wednesday), with an Austrian, a UK and possibly a German name joining in. Banks are said to be keen to complete deals ahead of the European Central Bank meeting tomorrow (Thursday).

Spanish and Dutch financial institutions are today (Tuesday) braving the government-guaranteed market after yesterday's turmoil. The two deals are coming wider than recent comparables, but are both understood to be going well.

Kommunalkredit Austria is in the market today (Friday) with a three year government guaranteed senior debt issue at a wider spread than was heard earlier this week, after Caixa Catalunya got its deal over the line yesterday (Thursday).

Caixa Catalunya today (Wednesday) announced that it has mandated Caja Madrid, Commerzbank, HSBC, LBBW, Natixis and Santander as joint leads for its first government guaranteed issue.