Spain

Erste Bank yesterday (Thursday) continued this week’s trend of pricing government guaranteed issues in line with guidance, some at tighter levels than the most recent deals from the respective jurisdictions. Meanwhile a third Spanish bank is preparing to follow in Caja Madrid's footsteps.

The financial institutions market today (Tuesday) burst into action with three guaranteed deals and one unguaranteed, after the quiet start to the week yesterday. And there is already speculation about the next mandate from Spain.

Fitch yesterday (Wednesday) announced positive rating news for two of Spain’s savings banks.

Government guaranteed issues from La Caixa and Raffeisen Zentralbank yesterday (Wednesday) were both priced tightly in terms of their premiums versus their respective sovereigns. But while this did not get in the way of the Austrian bank’s transaction, syndicate officials away from the Spanish deal have criticised the spread.

Activity in the euro government guaranteed bank debt market has picked up since Monday’s Swedbank issue, but only moderately. And despite an improvement in market sentiment, covered bond banks are keeping investors waiting for a follow-up to last week’s jumbo from Crédit Agricole.

The government guaranteed bank debt market was the juncture of two waves of negative sentiment in the markets this week, as downgrades hit the sovereign market and financial institutions suffered renewed pressure.

Moody’s yesterday (Monday) put the triple-A ratings of three series of multi-issuer cédulas on review for downgrade as a result of their exposure to Caja de Ahorros de Castilla-La Mancha (CCM) and the deterioration of the Spanish mortgage market.

HSH Nordbank today (Monday) opened books on a three year SoFFin-guaranteed benchmark deal at 0900 London time with guidance of 30bp over mid-swaps, which is where Commerzbank’s inaugural government-backed transaction was priced on Friday.

The Cover understands that the update to the Spanish covered bond framework will finally be completed early in the new year, with a Royal Decree expected in January.

Rating actions: Moody’s yesterday (Wednesday) upgraded the ratings of Banco Espanol de Credito’s cédulas hipotecarias from Aa1 to Aaa. Meanwhile S&P downgraded two cédulas issuers.

Rating action: Fitch today (Wednesday) downgraded Banco Guipuzcoano’s outstanding cédulas hipotecarias from AAA to AA+. The outstanding covered bonds amount to Eu1bn.

Rating action: Fitch yesterday (Tuesday) assigned a AAA expected rating to Caja Murcia’s Eu160m December 2011 issue of cédulas hipotecarias. The rating agency is still waiting for final documentation before finalising the rating.